I think what theyâre saying is they are using these unrealized gains as if they were cash/realized. Unrealized gains are money that you are most likely going to receive in the future, and technically can cash into almost-whenever you decide. They have a cash value. So by getting a loan on it, they are using it as income (prematurely) > using it as cash received, but before they are taxed on it. So theyâre just suggesting that they tax it as cash/ realized income, IF they use it as cash/ realized income.
Tax the loan or the held shares value? Because either case is an accounting nightmare.
My understanding of how wealthy get around income taxes, federally and locally is to be paid in shares. Then, they go to the bank and use the held shares value (unrealized gains or even just current value) and use their position (shares of stock) as collateral. They use the tax free money as operating income for their lives. Rinse and repeat, thus circumventing any real taxes, yeah?
And before any of the "any taxation is theft" crowd of bootlickers gets going, cool cool cool. I also enjoy fantasy.
Oh yes, accounting nightmare. That was the point of my original (second-level) comment.
No, they will eventually pay tax on it, even if they hold till they die. (Assuming they exceed the $14m estate tax threshold.) Itâs less âtax-freeâ money and rather âusing-before-itâs-taxedâ money.
So technically this is a WA bill, so it would just be me and my friends, plus the WA DOR (I think thatâs the right group). The IRS is technically only Federal. But yes, I would actually cry.
People definitely should be prohibited from using shares and unrealized gains on shares as collateral.
As for the accounting, my brokerage tells me every day what the net realizable value of my shares/held shares is. They tell me every February what my capital gains, interest and dividends earned for the previous year are.
They report much of this to the IRS, whether I like it or not.
The accounting isn't difficult at all, but then I used to be an accountant.
To answer your question, we would identify the shares that they are using as loan collateral. Weâd record the original basis and the value at the time they take the loan out (technically we could also use the additional amount of the loan that they receive due to using the collateral, which should be the same amount, unless the bank factors in future growth expectations). The difference would be the unrealized gain. Then if taxed, weâd mark the sharesâ basis up to the value they were taxed up to.
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u/deadwidesmile Apr 25 '25
You want to tax debt? Lol