$10,000

[agag2]

Hello

If I make $10,000 in profit via IM & then invest it in the stock market & loose the money (theoretically speaking) do I still have to pay taxes on those $10,000 or is it like any business loss that I'm allowed to write off?

Secondly, assuming in the first case I do not have to pay taxes, what if I keep the money in the stock market without cashing out (w/o selling the stock) do I pay taxes only after I sell the stock? Or do I need to withhold money for taxes?

Thanks

 

[agag2]

Anyone...?

 

[tomsko]

Good question, waiting for an answer too!

 

[GreenGoblin]

great question

 

[jimbo87]

What country are you from?

In the UK you can hold profits in S&S for up to two years before being liable for corporation tax on it.

James

 

[agag2]

What country are you from?

In the UK you can hold profits in S&S for up to two years before being liable for corporation tax on it.

James

I'm in the USA

I see many people have this question as well..

 

[michael784]

good question

 

[masush300]

i think
Only When you Pay Out to your bank account
and money should be more than 2000 around..
But it depends on country

 

[burnett4congress]

Depends on how your business is structured. If both events are in the same entity, then you have no net profit, so no taxes. Realistically, you'll have a carry forward loss.

 

[agag2]

Depends on how your business is structured. If both events are in the same entity, then you have no net profit, so no taxes. Realistically, you'll have a carry forward loss.

Thanks for reply.

What do you mean by "the same entity". I run my IM business from my home + investing is from my home. My business isn't officially incorporated or anything..

 

[LBrown]

Here's the best resource I found on it:

http://blog.turbotax.intuit.com/2012/03/22/can-i-take-a-tax-deduction-for-a-bad-investment/

It looks like you have to cash out or abandon the stock to claim it as a business loss.

If the two transactions were related - like instead of buying stocks you bought websites for you IM business and they flopped - you would not need to resell the investment to claim a loss. You could list it as a business expense and not a separate investment.

 

[burnett4congress]

Thanks for reply.

What do you mean by "the same entity". I run my IM business from my home + investing is from my home. My business isn't officially incorporated or anything..

If you don't have any corporations, then all your income and trading activity will be reported under your SSN. So your short term trading losses will offset your IM income.

 

[agag2]

If you don't have any corporations, then all your income and trading activity will be reported under your SSN. So your short term trading losses will offset your IM income.

Thanks. I had one follow up question.

Does this mean that if I invest all my IM money in stocks and don't sell those stocks this year that I am not obligated to pay taxes? Since you only pay on stocks after you sell..

Furthermore, do I have to file any tax returns at all? Or since I'm not paying anything I don't file..?

Again, this is assuming I invested ALL my IM earnings in stocks.

 

[Ebcompany]

If I was going to do this both the IM money and the stock would be owned by a corporation......I think it gets messy when a personal entity owns both and could very well find yourself getting audited and even if you did not do anything wrong....Im sure they will find something else you did wrong somewhere during the audit.

 

[agag2]

^^ why does it matter if I form an entity or not? From what I've read it seems that ANY capital loss cancels out capital gains & they both don't have to come from the same investment.

 

[Ebcompany]

I just stated how I would have done it for clarity and so there was no suspicion of it coming from or going into a bridge finance deal with another business of mine etc......I guess its just me speaking on how I would do it owning multiple companies. Of course an overall capital loss does cancel out a capital gain......I think myself that as a PERSON not as a BUSINESS when you are filing this information as personal income it invites unwanted eyes into your PERSONAL income and not just an overview of the business.....Im not sure Im making sense lol, can't find the words I wanna use to explain what Im thinking here

 

[futurestunner]

where did you find this question?

Hats off!!

 

[Riverstix]

Most of the replies so far seem logical but I would advise you to ask your tax professional or CPA. If you don't have one I would spend a few bucks out of that $10,000 to get some tax advice from a CPA

 

[burnett4congress]

Thanks. I had one follow up question.

Does this mean that if I invest all my IM money in stocks and don't sell those stocks this year that I am not obligated to pay taxes? Since you only pay on stocks after you sell..

Furthermore, do I have to file any tax returns at all? Or since I'm not paying anything I don't file..?

Again, this is assuming I invested ALL my IM earnings in stocks.

if you invest your income into stocks and keep the stocks, then you will owe income taxes on your income. Yes, you need to file your tax returns. (Even if you lose money for the year, you should file your tax returns.) The IRS will come after you eventually if you don't file. It takes them a few years, but they will make your life a living hell.

Then whenever you sell your stock, you will owe taxes on whatever gains you make with them.

Taxes are complicated though, and your overall tax burden will be unique to your situation. Ditto to the advice on consulting a CPA. If you need one, I work with a great one.

 

[phracktl]

You really need some better advice, so this might help you on your way:

Since 1986, U.S. tax laws have stated that losses can be claimed only against income in the same category. For example, passive losses can gener- ally be used only against passive income. Investment expenses, such as for margin interest or investment education, can go only against portfolio in- come.





Source: Loopholes of the Rich, 2005