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When do you get taxes assessed? When you sell. They don't come and say, "Hey, your investments went up 50%, so you owe us money. And if they went down, you take the loss after you sell.0December 23, 2019 10:35PM
jmlanzafAgain, that is a difference between when the gain/loss is realized versus when it occurs. The asset value is based on what it is worth at any point in time. If your asset is up 50%, you have an "unrealized gain" of 50%. But it is ludicrous to pretend you don't have a gain. Look in your retirement accounts. That is exactly what they call them "realized gain" and "unrealized gain", but they refer to both as a gain.
The simple fact is that if the asset is now worth $5,000 instead of $10,000, you've lost $5000 even if it hasn't yet been realized for tax purposes. Any attempt to convert the asset to cash immediately realizes the loss. You are only deceiving yourself if you consider it to still be a $10,000 asset. The $5k is gone, gone, gone.
Even the most rudimentary accounting methods value the asset at $5000 not $10,000. It really isn't arguable. You are confusing the value of the asset with the taxability. They aren't the same thing.