FTX, an International Cryptocurrency Exchange, filed for protection under the federal bankruptcy laws last week. It was one of the largest and most reputable exchanges in that market. Its CEO has gone into hiding.
The exchange lent billions to its affiliated trading firm Alameda Research to cover risky investments. Now FTX is trying to raise $8B to cover its shortfall.
This has left its clients wondering if they will ever see dime one of their investments. No one has any idea if they will get anything back or if whatever’s left will just go to the lawyers.
This issue raises a different but similar question. With most stock accounts down significantly this year, how should we handle our losses to deal with the coming income tax cycle?
One thing that shouldn’t be done is what we call a Wash Sale. It’s the frowned upon practice of taking a stock that’s already down, selling it to create an artificial loss, and then rebuying it within thirty days to not lose your position.
These transactions are reported to the IRS at the end of the year on your 1099-B. The fictitious losses they create are non-reportable transactions that don’t create an investment loss.
That being said, if you’re in a bad investment that you don’t think is going anywhere, sell it. Take the tax loss before the end of the year and move on.
We’ve all had them. We’re all going to have more of them. Take whatever is left and buy something that will hopefully do something.
Just because the markets are down doesn’t mean that you should panic. If anything, this should be considered a buying opportunity.
Everything is 20% – 40% off. Smart investors buy low and sell high. It may take some time, but it’ll come back. It always does.
The Cryptocurrency problem is another thing altogether. There you aren’t buying quality. In fact, I have no idea what it’s based on in the first place.
But harvesting tax losses is just another part of investing. We need to handle these issues every year, without fail, no matter what the markets are doing.
Let me leave you with this.
It looks like the GOP will again take control of the House while the Senate will stay in Democratic hands. The predicted Republican landslide didn’t have any stamina and faltered in the stretch.
Independents ended up voting with their more liberal counterparts. Many sighted the Republican’s inability to distance themselves from the January 6th riots and GOP candidates that were election deniers.
The question becomes what will happen in the time it takes to get to the next presidential election? One word.
The politics of hate have divided our country to a point where politicians are afraid to cross the aisle. It’s actually become unpopular for anyone to do the hard work of getting something that’s good for the country passed into law.
The middle has always been where things are accomplished. The far right and far left make the most noise and the best headlines, but that’s it. It’s just noise that sells newspapers and keeps people glued to the tube.
We need a functioning federal government. Without it, what do we have?
One side will pass this extreme measure that will get shot down by the other. The other side will do the same, doing nothing but racking up Brownie Points before the next election.
What will happen in the meantime? Inflation will continue and our economy will probably recess.
And no one will lead. As usual, it’ll all come down to us.
I haven’t had much good to write about since the beginning of the pandemic. By definition I’m an optimist. As an Entrepreneur, how can I not be one? I don’t do pessimism well.
Yet here we are. In the next couple of years, it’s going to be important for us to manage our individual circumstances.
Watch your people. Look at the world through their eyes. If there’s a problem, deal with it today before you have a bigger problem tomorrow.
Watch your customers. Reassure them. Let them know that everything is fine. You don’t want anyone jumping ship just because you woke up in a bad mood and made the mistake of answering the phone.
Watch your family. Realize that they will be fragile in the coming months. They aren’t in control and that can be scary. Be that steady hand at the wheel that gets your ship through the storm.
And the hardest part of all will be to watch yourself. We can’t help anyone else if we’re hurting. Schedule your vacations now. Take some time away from the front lines. Find a beach and remember your smile. If you need someone to talk to, you know my number.
In other words, be the Entrepreneur you were born to be. Lead.
Remember. It’s not just a job. It’s an adventure.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Employee Retention Credits, M&A Due Diligence, Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Accounting Solutions Ltd.
Note that the only professional services provided by Accounting Solutions Ltd. are those specified in a written communication from our office detailing the scope of services to be rendered and the terms and conditions applicable to the engagement.