Tax loss carryforward after going broke in trade?

Discussion in 'Taxes and Accounting' started by OptionFool, Sep 12, 2020.

  1. Overnight

    Overnight

    You need to consult with a bankruptcy lawyer before you pull the trigger on that idea, because it will haunt you for 10 years from date of judgement. It might be better for your credit to have a 1.5 mil debt on file, than a bankruptcy of 1 million. If you manage to repay that debt in, say, 5 years, then your file can be wiped clean. No more debt.

    But a personal bankruptcy will follow you for 10 years, no matter how many millions you earn later and pay off said debt. You have decisions to make. Explore your options before deciding on a court date.
     
    #21     Sep 12, 2020
  2. If the 500k owed the broker is forgiven I think it can be considered a cap gain you would have to pay taxes on. But then I'm not a tax guy. :p I know it can work that way if a bank a short sells a house for less than the mortgage.
     
    #22     Sep 12, 2020
  3. Overnight

    Overnight

    Well that is a downright silly idea, now isn't it? Puzzle that out in your head...

    You owe 500K. So you are -500K.

    Your -500K is discharged, so you are net zero.

    So how does that translate to a 500K gain you have to pay tax on?
     
    #23     Sep 12, 2020
  4. Beats the hell outta me. My head hurts now! :D Cerveza amigo!
     
    #24     Sep 12, 2020
    Overnight likes this.
  5. Overnight

    Overnight

    Absolutely! Beer-thirty maths! lol
     
    #25     Sep 12, 2020
  6. southall

    southall

    Do you have a wife, kids and house to lose?
    My guess the odds of suicide go up massively if you have those three to lose. A single guy renting a flat doesnt have much to lose.



    Even if you can withstand not topping yourself, there are also the long term effects to consider e.g higher risk of developing long term depression or medicating the pain away with drink and drugs. A slower form of suicide

    Some people are more resilient though and it doesn't effect them that badly
     
    Last edited: Sep 12, 2020
    #26     Sep 12, 2020
  7. vanzandt

    vanzandt

    :D
    You're two for two on the out loud laughs.
    ....Did we ever figure out why TSLA went from $1600 to $400?
     
    #27     Sep 12, 2020
    TrailerParkTed likes this.
  8. Not if he is MTM and made $5 million in 2019, 2018, 2017. He gets a carry back right?
     
    #28     Sep 12, 2020
  9. Overnight

    Overnight


    Oooh ohh oh *raises hand* (Like Horshack) Can I answer yet?
     
    #29     Sep 12, 2020
  10. horizon

    horizon

    If he filed section 475 the last time he filed he tax return, then he should be able to deduct it all as income loss. But since OP said he is not trader, just investor then can only do $3k per year. Sorry OP for your loss.
     
    #30     Sep 12, 2020
    TrailerParkTed and OptionFool like this.