"Marty" wrote in message
...
Capt. JG wrote:
"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.

This I would argue, say you want to start up a nifty new environmentally
friendly business recycling used (insert whatever here), you need 750K to
start up your plant.

You don't have 750K on hand, so you want to borrow it. A year ago you had
a house with market value of 400K and a 401 with a value of 600K,,, if you
put these up as a collateral, the loan should be a cinch.

This year your house has a market value of 200K and your 401 is now only
worth 400K,,, the bank may well think a bit differently about lending you
750K....

Cheers
Martin


Right. I agree with you. I don't believe you can use your 401K as collateral
on a business loan, but that aside, the fact that you don't have the asset
value to borrow against isn't the same as a direct dollar loss. It's a
separate decision to start a business. The value of the house and 401K has
certainly declined, but it can't be counted as a loss until you try to cash
out at a lower value. We've seen housing prices fluctuate quite a bit. Let's
say the original cost of my house was $300K. Let's say I put down $100K with
a $200K loan. Over the years it appreciated in value (on paper) to $1M. Wow.
I feel rich. I "made" $700K. Except, I didn't make anything. Not yet. I
decide to sell and get $1M. I made $700K. Cool. Or, I don't sell. I wait,
thinking it'll go higher still, but it goes down in value. Now, it's worth
$200K. Bummer. I feel poor. But, I haven't lost any money. Unless I'm
desperate because I can't make the mortgage payments... I refinanced when
the house was up in value. I lost my job. Whatever. Now, I have to sell so I
can feed and clothe my seven kids. Now, I've lost money.

Sure, there's a lost opportunity cost. I couldn't start that business. Bad
for me, bad for the economy. But, if I hold onto the property and wait out
the downturn in the stock market, I have a good chance of feeling rich
again. Maybe next time I'll sell or cash out. Or, I might not do anything
and they'll plant me in the yard when I'm done, although I'd prefer
scattering my ashes at sea. LOL

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

On Tue, 25 Nov 2008 20:34:20 -0500, Keith nuttle
wrote:

Dave wrote:
On Tue, 25 Nov 2008 15:38:10 -0800, "Capt. JG" said:

If the assets are "taken out" and the taxes are paid, then what becomes of
the reduced assets is a loss.

Why? You haven't sold them. Under your theory, no sale, no loss. And what's
with this "reduced assets?" You moved $10,000 in assets, let's say, from
your 401K to a taxable account at your broker's, wrote a check from your
checking account at the bank for the taxes on that $10,000, and continued to
hold the $10,000 in assets in your account at the broker's. No loss, right?
Another way of looking at it is if you must withdraw say 1000 a year
from you 10000 retirement fund to live. Your 1000 is 10% of you
retirement account. If the market drops by half you must now with draw
20% of the account to get the same 1000 required to live. If the market
has historically returned 10% per year the return on the first scenario
will match what you need to live. In the second scenario the return is
only half of the 20% you need to with draw. In this scenario your
retirement fund runs out in less than 10 years. Who is going to support
these people when their retirement is gone.

Sounds like a very good argument for keeping Social Security as strong
as possible.

"Dave" wrote in message
...
On Tue, 25 Nov 2008 17:46:14 -0800, "Capt. JG"
said:

The ultimate "private
sector" scenario transfers all social programs, including police and fire
to
those who can afford them, which is a non-serious argument.

You do indeed love straw men, Jon.



Totally not strawman argument. Those services are part of the social safety
net. Do you dispute this? If not, then why is privatizing them wrong? You
seem to think that social security is a bad thing.

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

"Dave" wrote in message
...
On Tue, 25 Nov 2008 17:39:50 -0800, "Capt. JG"
said:

If I had stock that was worth $100K, then, after the drop in stock
market, it would be worth say 1/2 that; however, no actual loss happens
unless I move the reduced assets to another set of instruments. If I do
that, I have built in the loss. If I don't move them, and the stock market
comes back, nothing changes except time. Are you really confused or just
trying to cover yourself?

Not at all confused. Just trying to straighten out your muddled thinking.
Take this example:

Case 1: Your GM stock has fallen 80%. You sell all your GM stock and put
the
proceeds into a money market fund. 2 days later the price of GM is the
same
and you decide that selling was a mistake, and you buy the stock back,
using
funds from the money market fund.

Case 2: Your GM stock has fallen 80%, but you decide it will come back, so
you decide not to sell.

Assume there's no tax on the transactions, because the stock is in a 401k.
Under your theory, you lost money in Case 1, but didn't lose money in Case
2. Yet in both cases the value of your GM stock on day 4 is precisely the
same.

An absurd conclusion? It should be obvious to anyone it is.


?? There is NO theory involved. If there's no sale transaction, how can
there possibly be a loss unless the business goes out completely??? Case 2:
I decide it will come back, I'm right, it does. My stock has the same or
greater value.

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

"Dave" wrote in message
...
On Wed, 26 Nov 2008 09:09:24 -0800, "Capt. JG"
said:

The ultimate "private
sector" scenario transfers all social programs, including police and
fire
to
those who can afford them, which is a non-serious argument.

You do indeed love straw men, Jon.



Totally not strawman argument. Those services are part of the social
safety
net. Do you dispute this? If not, then why is privatizing them wrong? You
seem to think that social security is a bad thing.

It seems you don't understand what a straw man argument is, Jon.

A straw man argument consists in setting forth an argument no one has made
and then knocking it down, rather than dealing with an argument actually
made. The above is a classic example. You set forth the argument that
police
and fire protection should not be provided by government--an argument no
one
has made. You then proceed to knock down that argument rather than
addressing whether other programs should be run by the guvmint.

I suspect that if you can't understand the previous paragraph, others can,
so I'll try not to belabor the point when you come back with the
inevitable
reply.


Really? Try google. You'll like it.

http://mediafilter.org/CAQ/CAQ54p.police.html

http://www.schneier.com/blog/archive...te_police.html

http://eclecticdem.blogspot.com/2008...ze-police.html


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

"Dave" wrote in message
...
On Wed, 26 Nov 2008 09:12:07 -0800, "Capt. JG"
said:

Case 1: Your GM stock has fallen 80%. You sell all your GM stock and put
the
proceeds into a money market fund. 2 days later the price of GM is the
same
and you decide that selling was a mistake, and you buy the stock back,
using
funds from the money market fund.

Case 2: Your GM stock has fallen 80%, but you decide it will come back,
so
you decide not to sell.

Assume there's no tax on the transactions, because the stock is in a
401k.
Under your theory, you lost money in Case 1, but didn't lose money in
Case
2. Yet in both cases the value of your GM stock on day 4 is precisely
the
same.

An absurd conclusion? It should be obvious to anyone it is.


?? There is NO theory involved. If there's no sale transaction, how can
there possibly be a loss unless the business goes out completely??? Case
2:
I decide it will come back, I'm right, it does. My stock has the same or
greater value.

The absurdity of that view has been conclusively demonstrated above to any
reasonable observer.


There's nothing absurd about it, and the only thing you've demonstrated is
your inability to accept when you've lost an argument. It's a fact. If you
can't handle facts, then I think you need to find another profession.

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

"Dave" wrote in message
...
On Wed, 26 Nov 2008 10:16:36 -0800, "Capt. JG"
said:

A straw man argument consists in setting forth an argument no one has
made
and then knocking it down, rather than dealing with an argument actually
made. The above is a classic example. You set forth the argument that
police
and fire protection should not be provided by government--an argument no
one
has made. You then proceed to knock down that argument rather than
addressing whether other programs should be run by the guvmint.

I suspect that if you can't understand the previous paragraph, others
can,
so I'll try not to belabor the point when you come back with the
inevitable
reply.


Really? Try google. You'll like it.

Now you're simply making yourself look foolish.


QED

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

On Wed, 26 Nov 2008 10:32:12 -0800, "Capt. JG"
wrote:

"Dave" wrote in message
.. .
On Wed, 26 Nov 2008 09:12:07 -0800, "Capt. JG"
said:

Case 1: Your GM stock has fallen 80%. You sell all your GM stock and put
the
proceeds into a money market fund. 2 days later the price of GM is the
same
and you decide that selling was a mistake, and you buy the stock back,
using
funds from the money market fund.

Case 2: Your GM stock has fallen 80%, but you decide it will come back,
so
you decide not to sell.

Assume there's no tax on the transactions, because the stock is in a
401k.
Under your theory, you lost money in Case 1, but didn't lose money in
Case
2. Yet in both cases the value of your GM stock on day 4 is precisely
the
same.

An absurd conclusion? It should be obvious to anyone it is.


?? There is NO theory involved. If there's no sale transaction, how can
there possibly be a loss unless the business goes out completely??? Case
2:
I decide it will come back, I'm right, it does. My stock has the same or
greater value.

The absurdity of that view has been conclusively demonstrated above to any
reasonable observer.


There's nothing absurd about it, and the only thing you've demonstrated is
your inability to accept when you've lost an argument. It's a fact. If you
can't handle facts, then I think you need to find another profession.

Are you kidding? Lawyers avoid truth at all costs, unless they think
they can somehow use it to their advantage without getting too
involved with it on a permanent basis. Accountants can make figures do
all sorts of things, and lawyers have a similar apptitude with "facts"

wrote in message
...
On Wed, 26 Nov 2008 10:32:12 -0800, "Capt. JG"
wrote:

"Dave" wrote in message
. ..
On Wed, 26 Nov 2008 09:12:07 -0800, "Capt. JG"
said:

Case 1: Your GM stock has fallen 80%. You sell all your GM stock and
put
the
proceeds into a money market fund. 2 days later the price of GM is the
same
and you decide that selling was a mistake, and you buy the stock back,
using
funds from the money market fund.

Case 2: Your GM stock has fallen 80%, but you decide it will come
back,
so
you decide not to sell.

Assume there's no tax on the transactions, because the stock is in a
401k.
Under your theory, you lost money in Case 1, but didn't lose money in
Case
2. Yet in both cases the value of your GM stock on day 4 is precisely
the
same.

An absurd conclusion? It should be obvious to anyone it is.


?? There is NO theory involved. If there's no sale transaction, how can
there possibly be a loss unless the business goes out completely??? Case
2:
I decide it will come back, I'm right, it does. My stock has the same or
greater value.

The absurdity of that view has been conclusively demonstrated above to
any
reasonable observer.


There's nothing absurd about it, and the only thing you've demonstrated is
your inability to accept when you've lost an argument. It's a fact. If you
can't handle facts, then I think you need to find another profession.

Are you kidding? Lawyers avoid truth at all costs, unless they think
they can somehow use it to their advantage without getting too
involved with it on a permanent basis. Accountants can make figures do
all sorts of things, and lawyers have a similar apptitude with "facts"



I'm trying to be solicitous, and I'm accounting for Dave's behavior as best
as I am able. LOL - sorry for the puns.


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

On Wed, 26 Nov 2008 12:14:00 -0800, "Capt. JG"
wrote:

wrote in message
.. .
On Wed, 26 Nov 2008 10:32:12 -0800, "Capt. JG"
wrote:

"Dave" wrote in message
...
On Wed, 26 Nov 2008 09:12:07 -0800, "Capt. JG"
said:

Case 1: Your GM stock has fallen 80%. You sell all your GM stock and
put
the
proceeds into a money market fund. 2 days later the price of GM is the
same
and you decide that selling was a mistake, and you buy the stock back,
using
funds from the money market fund.

Case 2: Your GM stock has fallen 80%, but you decide it will come
back,
so
you decide not to sell.

Assume there's no tax on the transactions, because the stock is in a
401k.
Under your theory, you lost money in Case 1, but didn't lose money in
Case
2. Yet in both cases the value of your GM stock on day 4 is precisely
the
same.

An absurd conclusion? It should be obvious to anyone it is.


?? There is NO theory involved. If there's no sale transaction, how can
there possibly be a loss unless the business goes out completely??? Case
2:
I decide it will come back, I'm right, it does. My stock has the same or
greater value.

The absurdity of that view has been conclusively demonstrated above to
any
reasonable observer.


There's nothing absurd about it, and the only thing you've demonstrated is
your inability to accept when you've lost an argument. It's a fact. If you
can't handle facts, then I think you need to find another profession.

Are you kidding? Lawyers avoid truth at all costs, unless they think
they can somehow use it to their advantage without getting too
involved with it on a permanent basis. Accountants can make figures do
all sorts of things, and lawyers have a similar apptitude with "facts"



I'm trying to be solicitous, and I'm accounting for Dave's behavior as best
as I am able. LOL - sorry for the puns.

You should be sorry!