To be honest, i think those Proshares Bear ETF are scam. They are 50% for hedging, 50% to steal money from investors. Their fast time decay always concerns me that the creator cheats us somehow. Looks at that horrible SVXY chart, yes it can drop, but to drop that much, looks like the creator really know how to trigger that stoploss and wipe a bunch of accounts at a time.
Tax loss carryforward after going broke in trade?
- Thread starter OptionFool
- Start date
How would the "creator" of an ETF benefit from "triggering" a stoploss that "wipes a bunch of accounts"?
BMK
I never elected to declare myself as 475(f) trader even though I would likely qualify. If I had, I could have carried losses back 3 years on my section 1256 contracts (vol products, and SPX). I would have been able to get about $13k back in taxes had I done so. oh well. Now I just have to plan on living 450 more years to eat up the 3k per yr vs ordinary income. Since 12k of income is tax-free to begin with, there is a good chance I won't even make 12k in a year, so I hope I won't be forced to use 3k carryforward in a year I only make 8k in income as it would be a total waste. But someone told me I can't elect to waive a tax lass carry forward?! Better if I had never been born.
In some cases, some of the capital loss carryforward gets used up each year, even if there is little or no income to absorb it. The IRS uses a very complicated formula. I suspect that things are further complicated by the fact that right now, the personal exemption has been reduced to zero (would normally be about $3400 per person or dependent, adjusted each year for inflation).
If your income is really under $12K, then you may not have to use up any of the loss.
Of course, if you start trading again...
then you could use much more than $3K per year to absorb gains.
The glass is half full: Any capital gain you have going forward will effectively be tax-free, probably for the rest of your life.
BMK
Although... now that I'm thinking about it, the amount of your capital loss carryforward may have to be adjusted due to some/all of the debt being erased by the bankruptcy
BMK
These books helped me get through a 6-figure loss about 10 years ago. It was my entire NW at the time, but I was young.
"What I Learned Losing a Million Dollars"
"When Supertraders Meet Kryptonite"
"What I Learned Losing a Million Dollars"
"When Supertraders Meet Kryptonite"
I read "...losing a million dollars" last year and felt it did not focus enough on his emotional reaction to his losses. And his loss happened slowly over many weeks so he had a chance to get out of his position. My loss all happened in less than 15 minutes in after-hours. I plan to read the Kryptonite book very soon. It looks promising. I am currently reading "Man's search for meaning". Trying to survive in a Nazi camp with little food, and cold weather makes my situation seem more manageable. No way I would have survived the camp like the author did, as I am not that strong.
I don't know, bankruptcy is pretty much tailor made for this type of situation if you've already unsuccessfully tried to get the debt discharged voluntarily. I run a couple of loan programs and so have some insight in to underwriting standards and credit scores. I was surprised that in some cases even several year before the magic 7 year mark many people end up with mid-level credit scores and qualify for standard loans. On the other hand, the debt sits there for 10 years and isn't discounted at all as time goes by. In year 9 you're still just as bad a credit risk with a $500K delinquent debt as you were in year 1 where as in year 5 of a bankruptcy you're much better off than in year 1 from a credit score perspective.
To the OP, it's hard to imagine the blow that would be to you. It might be worth trying to find other folks who have lived through similar situations and are now a few years past it to talk with in person.
Thanks for taking the time to reply. Bankruptcy is my ONLY reasonable option. I don't mind a weak credit score. I don't need credit. If I don't file, then if anyone will ever hire me, then I won't have to give up 25% of my pay in garnishment. I have zero assets they can take in the bankruptcy. Too bad I just didn't go to zero in my account instead of minus 1/2 mil. It is 100 times worse to have to file for bankruptcy even though either way I am still broke.