What would you do ?

[Nobert]

Maybe in your sub-conscious you are also hesitant about taking money, any money, but you're looking for a reason on morally higher ground to back away?.................

If i were hesitant , then only because of being afraid to loose his capital, & that scenario would be dealt with, before it happens, with spoken agreement, that he would be okay, with potential 10% loss on his capital.

It's pure morals that im dealing with. What is black and white.

I don't believe how the other party gained the capital is relevant to whether/how you invest/trade it. The relevant questions are in going forward.
• Taxing Authority issues: what will they see?
• Time/Risk/Performance issues: what are the agreed terms?

• Taxing Authority issues -

i would have to deposit, some of the amount as my own savings. Some of it as a debt from him. Maybe in two - three times. So it wouldn't catch the attention, with the question - ,, where did it came from ''
(all of the shady stuff ends here)

I would pay the 15% profit tax (that much we pay here, from any profits when trading derivatives - equities, options, dividends etc), it would be taken from 80% of his profits and 20% of mine.

• Time/Risk/Performance issues -

Time - question, well, so far, it stayed idle, with no use for him, eaten away by 3% - 5% yearly inflation, so , in his perspective, time horizon doesn't matter.

Risk - I haven't spoke about , how much of a draw down, he would be willing to accept to.

Performance - I haven't spoken about his expectations that deep. As far as i know, he had thoughts about beating inflation with few % of profits ;

hardly a challenge, as the most simple approach - loading my boat, with blue chips, after the crap hits the fence.

That's the most simplistic approach, but since iv got my own portfolio in that platform, i will be aiming for better results with low beta swings, without too much of exposure, not by holding blue chips, like some copy-paste of index.

If all of your trading is end-of-day or once a month, this may not be a big deal. But if you're spinning this capital in with your own, and you're assembling $hundreds or $thousands in trading commissions in moving things around, you do NOT want to have half-shady arrangements hanging over your brain.

This Tom.

Any kind of agreement, between us, most likely is gona be in words, based on trust. Maybe a written agreement, so the bank would leave me alone (some of it, i would have to ,,borrow'' from him)

If the shady aspect of that cash, could be forgotten through charitable work, which would be supported by taking a chunk from profits, i think i might justify, taking in those shady euros.

Ofcourse, with him, first we need a hell of conversation about all of this.

 

[tomorton]

If i were hesitant , then only because of being afraid to loose his capital, & that scenario would be dealt with, before it happens, by agreement by word, that he would be okay, with potential 10% loss on his capital.

It's pure morals that im dealing with. What is black and white..........

Yes, I also talk only of morals here. I suggest that all questions concerning the initial capital, profits, losses, interest, risk, strategies, tax etc. etc. are all irrelevant. My argument is that its morally wrong to accept any money from your friend to trade with. Your toing and froing increases my feeling that you're not happy with it either.

 

[Nobert]

Yes, I also talk only of morals here. I suggest that all questions concerning the initial capital, profits, losses, interest, risk, strategies, tax etc. etc. are all irrelevant. My argument is that its morally wrong to accept any money from your friend to trade with. Your toing and froing increases my feeling that you're not happy with it either.

It doesn't add any happiness at all.

I used to deny that idea and offer in the past, at first glimpse, but recently, had some troubles with work/income, and simply put, financial state.

So the idea came back to me, that ,,Oh, i could do it, and those potential 20% from profits, would definitely add up''

Then i started looking for moral justifications, for going against my own principles.

And the best part - one hour later, from the moment i made this topic, i received a good job offer, which would put me back on the track, in saving my own capital & i would not need to take in that cash.

 

[murray t turtle]

I'm failing to see the problem on your side of the equation.

%% Besides ,
NOT paying any taxes?? NEED more info

 

[Overnight]

It's very simple. Once i take it, i stays with me , for the rest of my life, the knowing that i took in something, that was acquired - partially in illegal way. (avoiding profit taxes from individual activity/business)

The question should not be "what he did or not do on taxes with that money", for that part is irrelevant once it is given to you.

The question should be, "How will we, as friends, handle a dispute when I make or lose X amount of his money?" Friendships can be strong, and so can families. But in many cases, money disputes are thicker than friendships, and blood.

 

[ironchef]

General life lessons:

1. If it is too good to be true, don't do it.

2. If it doesn't pass the smell test, don't do it.

3. If you cannot sleep nights, don't do it.

The fact that you worried about the situation, you have to come to an anonymous forum asking us anonymous ETers, means you are not comfortable with it and the arrangement. Someone who cheats the Government may one day cheats on you.

Life is too short to do things you don't feel right because it is a slippery slope that trapped many well meaning folks.

Best wishes.

 

[raVar]

I don't believe how the other party gained the capital is relevant to whether/how you invest/trade it. The relevant questions are in going forward.
• Taxing Authority issues: what will they see?
• Time/Risk/Performance issues: what are the agreed terms?

One read of your statements above has you taking title to the capital. Is it in fact yours? And you're simply to *give* the original owner 80% of the net take? Who's taking the tax burden? If it's through structured accounts, then you both are. If it's just you, then you need to question the legality AND the morality of that tax situation going forward. (And the common sense: if you make a dollar, the government will want 30¢, the neighbor will want 20¢, and you get 50¢, AND a blot on your financials, should you ever get audited, Holy Cow.)

The second issue is with regard to the termination point. Whether by time ("5 years or bust.") or by situation ("5 years or bust."), what happens if this guy dies next month? What happens if the net liq. gets hit by 30%? 40%? "Shit happens" -- are they cognizant? What happens if you have a parting of friendly relations? Termination has to be spelled out plainly -- whether by time, by situation, or by performance. Having the market go against you and then having a half-informed "client" call you is not a situation that anyone needs.

If all of your trading is end-of-day or once a month, this may not be a big deal. But if you're spinning this capital in with your own, and you're assembling $hundreds or $thousands in trading commissions in moving things around, you do NOT want to have half-shady arrangements hanging over your brain.

A billion times the above quoted post

A) When the Government comes for the money? It will make an attempt to recover that money. And it's the Government. They can pretty much do what they want, and will conduct Forensic's on the accounting of what money went where. Do you really want to be tied up in that?

B) Exchanges run audits of their own, that in recent years, have become quite sophisticated. So by trading, you're automatically involving more than you and your buddy. You are also involving the exchanges and FCM's as legal counterparties to what happened.. Who run by the own rules via the SRO's, and those SRO's are allowed to make up rules ... sorta on a whim. Depending on the structure you trade under? You can be barred from Trading, if something goes awry

 

[BlueWaterSailor]

Someone who cheats the Government may one day cheats on you.

While I agree with the rest of what you've written, how you deal with a bureaucracy is not exactly relevant to how you relate to your friends. I seriously doubt that you're in the habit of trusting the IRS, the FBI, and your local cops with your deepest secrets, so this comes across as being rather sanctimonious.

 

[ironchef]

While I agree with the rest of what you've written, how you deal with a bureaucracy is not exactly relevant to how you relate to your friends. I seriously doubt that you're in the habit of trusting the IRS, the FBI, and your local cops with your deepest secrets, so this comes across as being rather sanctimonious.

I said nothing about trusting the Government, the IRS, the FBI... I am talking about someone's character.

 

[Overnight]

...
A) When the Government comes for the money? It will make an attempt to recover that money. And it's the Government. They can pretty much do what they want, and will conduct Forensic's on the accounting of what money went where. Do you really want to be tied up in that?...

If the government doesn't know that any money was earned, then there is nothing to come after. Jesus, you people are all paranoid. Maybe the original guy did his business in all cash, and NOT through a business entity? Or are people here the type that would account for all of the cash tips they earn, and dutifully report those tips on their 1040 form, so they can pay taxes on them like a true patriot?

Fer crying out loud, the IRS has bigger fish to fry.