SG Young Investment

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Nice to meet you my fellow 88 baby. Haha. I read a few of your posts and I’m happy to see that you’re having good goals and starting out on investments too. I do know that savings will decrease as we get older especially when we start a grouped family. I’m still single now but am finding your way through anything that will come (it’s weird I haven’t found the lady yet but I’m finding your way through it already.

The 100k will be my investment capital which can’t be used for just about any other things aside from investments. Even if my cost savings decrease when I get married, I’d still have a passive income from the 100k spent so that it will at least supplement some of my lost cost savings. It’s good to discover a partner who’s prudent in finances and have the same goals which can strive towards to (envision both husband and wife have 100k each, that is quite significant for a couple investment account. It remains a dream for me personally. Let’s keep in contact. It’ll be good to encourage each other in this financial journey. All the best to your financial trip too.

While this wide application has expanded to many banks (i.e., due to their activities of originating loans to be sold to third-party investors), other taxpayers involved with similar activities may fall within the definition also. For example, a nonbank lender that performs the same function may qualify as a dealer in securities, as might a taxpayer with a dynamic securities brokerage division.

However, a statutory clarification provided in Sec. Due care and planning must be carried out when deciding whether to apply mark-to-market accounting to investment securities. Once a taxpayer elects to use mark-to-market accounting to noninventory securities, the taxpayer must continue with this application before securities mature or are otherwise disposed of. While mark-to-market accounting may enable the taxpayer to accelerate deductions for losses and downward valuations, it can also speed up taxable income on unrealized benefits that would otherwise not be taxed until disposition.

The identification requirements and the requirement to continue the application of the mark-to-market guidelines prevent choosing in and out of these rules as the worthiness of the securities rises and falls. Furthermore, the guidelines cannot be put on deduct declines in value that occur prior to the mark-to-market guidelines are applied, as only prospective application is allowed. Thus, to speed up deductions under the mark-to-market guidelines effectively, the taxpayer must successfully predict which of its investments will eventually lose value.

Prop. Regs. Sec. 1.475(a)-1(f) includes ordering rules for adjusting the basis of noninventory debt burden upon which deductible bad debts may be claimed by sellers in securities under Sec. Another account that requires extreme care in the use of the mark-to-market guidelines to noninventory securities is the character of the gain or reduction resulting from the mark-to-market adjustment.

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  5. ► May 2009 (2)

Sec. 475(a) (2) claims that the mark-to-market gain or lack of noninventory securities is set as though the security was sold for its FMV on the last business day of the taxes 12 months. This presumed sale does not change the type of the producing gain or reduction (see Sec. 475(d) (3) (B) and Regs. Sec.

Thus, if the securities are capital possessions in the hands of the taxpayer, the resulting mark-to-market gain or reduction is a capital gain or loss. Example 3: Assume the same facts as Example 1, but assume that Corporation A qualifies as a dealer in securities under Sec. 5,000 worthless debt deduction in calendar year 3 (i.e., the worthless personal debt is presumed to truly have a basis of zero for purposes of applying the mark-to-market rules). These deductions would also be available if the decline in value of the securities was related to market fluctuations other than those due to creditworthiness, as the mark-to-market guidelines do not distinguish among potential sources of market value decline.

Example 4: Assume the same facts as Example 3, but that Corporation A is a bank or investment company. Consequently, its gain or loss resulting from the investment in the Corporation B bonds is regular rather than capital (Sec. 166 for partial worthlessness. Conclusion: Corporation A is entitled to the same deductions as those determined in the final outcome to Example 3, but each of the losses is a bad debt deduction, as opposed to a mark-to-market reduction, under the ordering rule of Prop. Regs. Sec. 1.475(a) -1(f), i.e., because the deductible reduction is allowed under Sec.

166. These deductions are regular in character. A drop in the value of investment securities has caused many taxpayers to suffer financial losses lately. Moreover, while taxpayers continue steadily to hold these securities, their opportunity to claim an ongoing deduction for these deficits is limited. Certain taxpayers, such as banks, enjoy more liberal guidelines for claiming current deductions, but most taxpayers must defer losing deductions before securities are becoming or sold completely worthless.