What happens if the value of the underlying asset depreciates?
Here’s a hypothetical:
- I own $100 of stock in Company A.
- The First International Bank of efsavage decides to accept that $100 in stock as collateral on a loan. So I pay taxes assuming a value of $100.
- When I dispose of the stock, it is only worth $80.
Will that be a retroactive credit, meaning that I will have to amend my tax return in the year that I collateralized those assets? Would it be a forward tax credit, meaning that I could apply that credit to future years?
I worry about this both from a bookkeeping point of view (since this is potentially a lot of credits) but also worry the ways it could be manipulated.
Here’s a hypothetical:
- I own $100 of stock in Company A.
- The First International Bank of efsavage decides to accept that $100 in stock as collateral on a loan. So I pay taxes assuming a value of $100.
- When I dispose of the stock, it is only worth $80.
Will that be a retroactive credit, meaning that I will have to amend my tax return in the year that I collateralized those assets? Would it be a forward tax credit, meaning that I could apply that credit to future years?
I worry about this both from a bookkeeping point of view (since this is potentially a lot of credits) but also worry the ways it could be manipulated.