"Dave" wrote in message
...
On Mon, 24 Nov 2008 11:50:50 -0800, "Capt. JG"
said:

You'll only lose in a 401K if you sell or reallocate.

Nonsense. You're fooling yourself. If today you have an asset that could
be
sold for x, and yesterday it could have been sold for 2x, you've lost half
the value of the asset since yesterday. You might hope it will again be
saleable for 2x some day, but that's just a hope.


Incorrect. You've lost nothing until you sell it. It's funny money unless
you sell or reallocate. Did you actually attend accounting 101? LOL

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

"Dave" wrote in message
...
On Mon, 24 Nov 2008 14:11:09 -0800, "Capt. JG"
said:

Nonsense. You're fooling yourself. If today you have an asset that could
be
sold for x, and yesterday it could have been sold for 2x, you've lost
half
the value of the asset since yesterday. You might hope it will again be
saleable for 2x some day, but that's just a hope.


Incorrect. You've lost nothing until you sell it.

Ever hear of mark to market treatment of financial instruments? FAS 115?
FAS
157?

No. I thought not.

It's funny money unless
you sell or reallocate. Did you actually attend accounting 101? LOL

The difference apparently is that my learning on the topic didn't end 35
years ago.


Your rant has absolutely nothing to do with losing or not losing money on a
401K portfolio. The only ways to lose money is for the underlying companies
to go belly up, you sell when the stocks are down, or similarly reallocate
your portfolio, e.g., into bonds from stocks, when the stocks are down.

As I said, you need to either take an updated class or read the original
post.


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

"Capt. JG" wrote in message
easolutions...

Your rant has absolutely nothing to do with losing or not losing money on
a 401K portfolio. The only ways to lose money is for the underlying
companies to go belly up, you sell when the stocks are down, or similarly
reallocate your portfolio, e.g., into bonds from stocks, when the stocks
are down.


The portfolio could go up and one can still lose by paying the tax burden.

"Dave" wrote in message
...
On Mon, 24 Nov 2008 16:08:51 -0800, "Capt. JG"
said:

It's funny money unless
you sell or reallocate. Did you actually attend accounting 101? LOL

The difference apparently is that my learning on the topic didn't end 35
years ago.


Your rant has absolutely nothing to do with losing or not losing money on
a
401K portfolio.

It did, however, have something to do with your suggestion that I don't
know
anything about accounting.

True. You do know something about accounting.


The only ways to lose money is for the underlying companies
to go belly up, you sell when the stocks are down, or similarly reallocate
your portfolio, e.g., into bonds from stocks, when the stocks are down.

What you paid for securities is a historical accident, just as the book
value of plant and equipment on an enterprise's balance sheet is a
historical accident. It has no current relevance. Securities you hold
today
are worth whatever a willing buyer would pay for them in an orderly sale.
Period.

Correct.

The decision to account for various assets at cost, market or some other
basis is the result of resolving the conflicting accounting concepts of
certainty and relevance. The accounting convention calling for PPE to be
valued at depreciated cost represents a tilt toward certainty, since cost
is
easily determined, and market value is less so. In the case of securities
held for sale, and having a readily determinable market value, the balance
is tilted the other way.

The key phrase is "for sale." If you're not selling the items in your 401K,
you're not making a profit or a loss.

I will tell you that during the current year I have discovered errors by
two
major bank accounting firms requiring a restatement of the numbers they
had
previously audited and given a clean report on. When I analyzed the
accounting treatment for them they agreed and restated.

And your point?

But you just go ahead and tell yourself you haven't lost anything if that
makes you feel better.

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? LOL

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

"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

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

"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

"Dave" wrote in message
...
On Tue, 25 Nov 2008 09:27:38 -0800, "Capt. JG"
said:

it isn't unless I sell or the company goes
worthless, after which I can then call it a loss.

You just keep telling yourself that. You'll sleep better.


So, you're claiming that it's a loss, yet you haven't yet substantiated that
with one thing. I sleep just fine.

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

On Tue, 25 Nov 2008 11:02:48 -0800, "Capt. JG"
wrote:

"Dave" wrote in message
.. .
On Tue, 25 Nov 2008 09:27:38 -0800, "Capt. JG"
said:

it isn't unless I sell or the company goes
worthless, after which I can then call it a loss.

You just keep telling yourself that. You'll sleep better.


So, you're claiming that it's a loss, yet you haven't yet substantiated that
with one thing. I sleep just fine.

All in the timing.
Got a buddy about to retire who will roll his mostly equity 401k into
FDIC insured IRA's to lock in his future retirement funds.
Can't get that money out of the 401k until he retires.
He says he'll get less than the contributions that came out of his pay
checks.
There's a reason the guv put a 1.00 par guarantee on 401k money
market funds as one of the first acts of the current bailouts.
Otherwise the entire 401k rationale could be destroyed.
There would be no safe haven for your 401k retirement funds.
I thought 401k's would be kaput before I heard of the guarantee.
Always resented the non-free market nature of the 401k system.
For fiscal conservatives like me, the money markets weren't
competitive with what was available in the open market.
Of course I'm only talking about my company's 401k offerings, but
that fact is just more reinforcement of my notion.

--Vic

"Vic Smith" wrote in message
...
On Tue, 25 Nov 2008 11:02:48 -0800, "Capt. JG"
wrote:

"Dave" wrote in message
. ..
On Tue, 25 Nov 2008 09:27:38 -0800, "Capt. JG"
said:

it isn't unless I sell or the company goes
worthless, after which I can then call it a loss.

You just keep telling yourself that. You'll sleep better.


So, you're claiming that it's a loss, yet you haven't yet substantiated
that
with one thing. I sleep just fine.

All in the timing.
Got a buddy about to retire who will roll his mostly equity 401k into
FDIC insured IRA's to lock in his future retirement funds.
Can't get that money out of the 401k until he retires.
He says he'll get less than the contributions that came out of his pay
checks.
There's a reason the guv put a 1.00 par guarantee on 401k money
market funds as one of the first acts of the current bailouts.
Otherwise the entire 401k rationale could be destroyed.
There would be no safe haven for your 401k retirement funds.
I thought 401k's would be kaput before I heard of the guarantee.
Always resented the non-free market nature of the 401k system.
For fiscal conservatives like me, the money markets weren't
competitive with what was available in the open market.
Of course I'm only talking about my company's 401k offerings, but
that fact is just more reinforcement of my notion.

--Vic



You're right Vic. It's all about timing. One of the major problems is that
older people are forced to withdraw money, which means they do take a loss.
This needs to be addressed in my and others' opinions.


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