If i were hesitant , then only because of being afraid to loose his capital, & that scenario would be dealt with, before it happens, with spoken agreement, that he would be okay, with potential 10% loss on his capital. It's pure morals that im dealing with. What is black and white. • Taxing Authority issues - i would have to deposit, some of the amount as my own savings. Some of it as a debt from him. Maybe in two - three times. So it wouldn't catch the attention, with the question - ,, where did it came from '' (all of the shady stuff ends here) I would pay the 15% profit tax (that much we pay here, from any profits when trading derivatives - equities, options, dividends etc), it would be taken from 80% of his profits and 20% of mine. • Time/Risk/Performance issues - Time - question, well, so far, it stayed idle, with no use for him, eaten away by 3% - 5% yearly inflation, so , in his perspective, time horizon doesn't matter. Risk - I haven't spoke about , how much of a draw down, he would be willing to accept to. Performance - I haven't spoken about his expectations that deep. As far as i know, he had thoughts about beating inflation with few % of profits ; hardly a challenge, as the most simple approach - loading my boat, with blue chips, after the crap hits the fence. That's the most simplistic approach, but since iv got my own portfolio in that platform, i will be aiming for better results with low beta swings, without too much of exposure, not by holding blue chips, like some copy-paste of index. This Tom. Any kind of agreement, between us, most likely is gona be in words, based on trust. Maybe a written agreement, so the bank would leave me alone (some of it, i would have to ,,borrow'' from him) If the shady aspect of that cash, could be forgotten through charitable work, which would be supported by taking a chunk from profits, i think i might justify, taking in those shady euros. Ofcourse, with him, first we need a hell of conversation about all of this.
Yes, I also talk only of morals here. I suggest that all questions concerning the initial capital, profits, losses, interest, risk, strategies, tax etc. etc. are all irrelevant. My argument is that its morally wrong to accept any money from your friend to trade with. Your toing and froing increases my feeling that you're not happy with it either.
It doesn't add any happiness at all. I used to deny that idea and offer in the past, at first glimpse, but recently, had some troubles with work/income, and simply put, financial state. So the idea came back to me, that ,,Oh, i could do it, and those potential 20% from profits, would definitely add up'' Then i started looking for moral justifications, for going against my own principles. And the best part - one hour later, from the moment i made this topic, i received a good job offer, which would put me back on the track, in saving my own capital & i would not need to take in that cash.
The question should not be "what he did or not do on taxes with that money", for that part is irrelevant once it is given to you. The question should be, "How will we, as friends, handle a dispute when I make or lose X amount of his money?" Friendships can be strong, and so can families. But in many cases, money disputes are thicker than friendships, and blood.
General life lessons: 1. If it is too good to be true, don't do it. 2. If it doesn't pass the smell test, don't do it. 3. If you cannot sleep nights, don't do it. The fact that you worried about the situation, you have to come to an anonymous forum asking us anonymous ETers, means you are not comfortable with it and the arrangement. Someone who cheats the Government may one day cheats on you. Life is too short to do things you don't feel right because it is a slippery slope that trapped many well meaning folks. Best wishes.
A billion times the above quoted post A) When the Government comes for the money? It will make an attempt to recover that money. And it's the Government. They can pretty much do what they want, and will conduct Forensic's on the accounting of what money went where. Do you really want to be tied up in that? B) Exchanges run audits of their own, that in recent years, have become quite sophisticated. So by trading, you're automatically involving more than you and your buddy. You are also involving the exchanges and FCM's as legal counterparties to what happened.. Who run by the own rules via the SRO's, and those SRO's are allowed to make up rules ... sorta on a whim. Depending on the structure you trade under? You can be barred from Trading, if something goes awry
While I agree with the rest of what you've written, how you deal with a bureaucracy is not exactly relevant to how you relate to your friends. I seriously doubt that you're in the habit of trusting the IRS, the FBI, and your local cops with your deepest secrets, so this comes across as being rather sanctimonious.
I said nothing about trusting the Government, the IRS, the FBI... I am talking about someone's character.
If the government doesn't know that any money was earned, then there is nothing to come after. Jesus, you people are all paranoid. Maybe the original guy did his business in all cash, and NOT through a business entity? Or are people here the type that would account for all of the cash tips they earn, and dutifully report those tips on their 1040 form, so they can pay taxes on them like a true patriot? Fer crying out loud, the IRS has bigger fish to fry.