(03-30-2025, 03:22 PM)mikesez Wrote:

(03-30-2025, 02:44 PM)Sneakers Wrote: First of all, to get a loan using stock as collateral, a bank will typically want double the loan amount at the current trading price.  For a 200k loan, that means 400k stock for security, so your tax calculation is wrong. 

Second, borrowed money is NOT income.  Income you can keep, borrowed funds have to be paid back.  It only becomes taxable income if the debt is forgiven by the lender, in which case you should receive a 1099-C.

Third, you just killed the home-equity loan business.  

Now let's talk about losses.  Under your plan, if I paid 50k for a new car (or boat, tractor, RV, etc.) a few years ago, and now it's worth 20k, I could take out a loan against it and the IRS would send me a refund for my "loss"?  SWEET!

The people writing the law would be free to use either the loan amount or the bank-demanded multiple of the loan amount in their tax calculation. I suggest the loan amount, which results in a lower tax. 

As far as HELOCs, if it's a primary residence, its gains already aren't taxable, regardless of if the gains were realized as a sale or as a loan.

If it was a business vehicle, you could already claim its depreciation as a loss.  For a personal vehicle you can not.

Got any more misinformation?