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Posted by Taxlover on February 24, 2008, 8:00 pm
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7 years ago I lent someone $100,000. He put up gems worth $150,000 as
collateral; with the understanding that they would be sold to pay off the
loan.
We sold $20,000 worth and figured it wouldn't take too long to finish up.
Then 9/11 happened, the market for gems collapsed and hasn't recovered.
Needless to say, he defaulted on the loan; owing me $80,000 and leaving me
gems worth maybe $50,000. The person selling them hasn't been able to move
much since then, but swears the market will recover and I should hold off on
panicking.
Is there any way to take my $30,000 loss, and if I ever sell the gems for
more than $50,000 pay capital gains? Or am I just stuck doing nothing until
I dump them?
Yeah, I understand that it sounds like a scam, but it really wasn't. The
valuation was done by my jeweler, I got 2% of the company and 12% interest.
At the time it was a viable company and a reasonable investment.
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Posted by D. Stussy on February 24, 2008, 8:54 pm
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> 7 years ago I lent someone $100,000. He put up gems worth $150,000 as
> collateral; with the understanding that they would be sold to pay off the
> loan.
> We sold $20,000 worth and figured it wouldn't take too long to finish up.
> Then 9/11 happened, the market for gems collapsed and hasn't recovered.
>
> Needless to say, he defaulted on the loan; owing me $80,000 and leaving me
> gems worth maybe $50,000. The person selling them hasn't been able to
move
> much since then, but swears the market will recover and I should hold off
on
> panicking.
>
> Is there any way to take my $30,000 loss, and if I ever sell the gems for
> more than $50,000 pay capital gains? Or am I just stuck doing nothing
until
> I dump them?
>
> Yeah, I understand that it sounds like a scam, but it really wasn't. The
> valuation was done by my jeweler, I got 2% of the company and 12%
interest.
> At the time it was a viable company and a reasonable investment.
No. The debt is not worthless. It has been satisfied. You have a basis in
the gems of $80k.
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Taxlover on February 24, 2008, 9:39 pm
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>> 7 years ago I lent someone $100,000. He put up gems worth $150,000 as
>> collateral; with the understanding that they would be sold to pay off the
>> loan.
>> We sold $20,000 worth and figured it wouldn't take too long to finish up.
>> Then 9/11 happened, the market for gems collapsed and hasn't recovered.
>>
>> Needless to say, he defaulted on the loan; owing me $80,000 and leaving
>> me
>> gems worth maybe $50,000. The person selling them hasn't been able to
> move
>> much since then, but swears the market will recover and I should hold off
> on
>> panicking.
>>
>> Is there any way to take my $30,000 loss, and if I ever sell the gems for
>> more than $50,000 pay capital gains? Or am I just stuck doing nothing
> until
>> I dump them?
>>
>> Yeah, I understand that it sounds like a scam, but it really wasn't. The
>> valuation was done by my jeweler, I got 2% of the company and 12%
> interest.
>> At the time it was a viable company and a reasonable investment.
>
> No. The debt is not worthless. It has been satisfied. You have a basis
> in
> the gems of $80k.
>
So I don't have a loan loss at all; I have some gems I will probably sell at
a loss?
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Stuart Bronstein on February 25, 2008, 3:42 pm
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>>> 7 years ago I lent someone $100,000. He put up gems worth
>>> $150,000 as collateral; with the understanding that they would
>>> be sold to pay off the loan.
>>> We sold $20,000 worth and figured it wouldn't take too long to
>>> finish up. Then 9/11 happened, the market for gems collapsed and
>>> hasn't recovered.
>>>
>>> Needless to say, he defaulted on the loan; owing me $80,000 and
>>> leaving me gems worth maybe $50,000.
>>>
>>> Is there any way to take my $30,000 loss, and if I ever sell the
>>> gems for more than $50,000 pay capital gains? Or am I just
>>> stuck doing nothing until I dump them?
>>
>> No. The debt is not worthless. It has been satisfied. You have
>> a basis in the gems of $80k.
>>
> So I don't have a loan loss at all; I have some gems I will
> probably sell at a loss?
You don't have a loss yet. You have two options. One is to sell the
gems now, and when they are all gone you can take whatever loss you
have. The other is to wait until later, and at that time take whatever
gain or loss there is.
Stu
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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