"Dave" wrote in message
...
On Mon, 24 Nov 2008 17:21:26 -0800, "Capt. JG"
said:

Please show me how I would account for my supposed 401K losses when it
comes
time to file my return. Should I deduct the $100K?

Different question entirely. There are significant differences between the
way things are reported for tax purposes and the way they are accounted
for
under generally accepted accounting principles. Else there would be no
such
thing as loss carry-forwards and deferred tax assets. So you report the
losses the same way you accounted for the gains, if any, you had before
the
market decline.

There are also major differences between cash accounting and accrual
accounting. Accrual accounting is generally designed to eliminate the
effect
of the accident of when cash is received or paid, and reflect the
underlying
economic impact of events occurring during a period. On a cash basis, you
wouldn't record a gain or loss on an asset until the asset is sold. But if
you let that fact obscure the underlying economic reality you are simply
fooling yourself..


So, according to the IRS no loss took place. According to my regular bank
balance, no loss took place. According to my ability to buy bread with cash
on hand or with my credit card, no loss took place. So, according to my
credit score, nothing has changed. So, how is it a loss? If the value of the
stock will likely increase (assuming the company doesn't go bust) over time,
I'm not relying on my 401K to live, and I'm not selling it any time soon,
how is it a loss? Answer: it isn't unless I sell or the company goes
worthless, after which I can then call it a loss.


--
"j" ganz @@
www.sailnow.com