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Forex Tax "Basis Risk"

  • #1
  • First Post: Jan 5, 2014 7:59pm Jan 5, 2014 7:59pm
Happy New Year, folks!

Just curious.... Has anyone been in a situation (or maybe you know someone who had to deal with it) where you make a lot of money as of Dec 31st and lose it all before taxes are due? I always worry about this and hence I withdraw about 25% of profits right after Jan 1st. I'm in the US and my job earnings statement (W-2) does not come out till around Jan 31st. After that, I take about a week to file my taxes.

Considering how many people are so highly leveraged, I was wondering how someone in such a situation dealt with the tax bill.
  • #2
  • Jan 6, 2014 5:44am Jan 6, 2014 5:44am
I'm not in the USA but there's plenty of horror stories about. If you have a good year then suffer a drawdown at the beginning of the new tax year, or even lose it all, you still have to pay tax on the profit you made the previous year. People have landed in big trouble this way, even ending up in jail. You can owe the IRS a lot more than you have.
si hoc legere scis nimium eruditionis habes
  • #3
  • Jan 7, 2014 2:46am Jan 7, 2014 2:46am
No way but to play forex safe, closing all your orders 2-3 days before new year. Is it so difficult or somebody think that he can get big profit at the end of a year? I think more reasonable to have small income result than to be in debt, especially to IRS
  • #4
  • Jan 8, 2014 10:48pm Jan 8, 2014 10:48pm
Quoting leebsurag
No way but to play forex safe, closing all your orders 2-3 days before new year. Is it so difficult or somebody think that he can get big profit at the end of a year? I think more reasonable to have small income result than to be in debt, especially to IRS
Yup, same here. That's why I missed the down move in U/J. I closed a losing short because of the end of the year.
  • #5
  • Last Post: Jan 18, 2014 2:18am Jan 18, 2014 2:18am
Quoting card
Happy New Year, folks! Just curious.... Has anyone been in a situation (or maybe you know someone who had to deal with it) where you make a lot of money as of Dec 31st and lose it all before taxes are due? I always worry about this and hence I withdraw about 25% of profits right after Jan 1st. I'm in the US and my job earnings statement (W-2) does not come out till around Jan 31st. After that, I take about a week to file my taxes. Considering how many people are so highly leveraged, I was wondering how someone in such a situation dealt with the...
Most Western jurisdictions allow for loss carry overs. Check with your local tax office.
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