Robinhood trader made $45k trading now faces $800,000 tax bill

[Amestafuu (Emeritus)]

Yall nikkaz believe everything read, fake ass forbe net worth statements and now this bullshyt

even it were true, he wouldn't have to pay because he doesn't have the money, the IRS will label him unable to pay

I know because I purposely filed taxes so I could income I didn't make just to get a loan, and owed the IRS hundreds and thousands of dollars in taxes more so because of penalties

I never paid a dime

There's a document called an offer in compromise you can file to get out of any tax debt, but you don't even have to do that

I ignored them the entire time and let penalties rack up, and eventually they put out a benchmark warrant for my arrest, the US marshalls came to my house first, then IRS agents before that, I was out of town when they issued the warrant

All I did was came to their headquarters and told them I was broke, they could easily see I didn't have the money to pay the shyt, and that was that, the leins and everything were taking off my bank accounts, and I was label unable to pay

you nikkaz worry about shyt too much

only people who need to be afraid of the IRS are people with money who acting like they don't have it, they can't get you for tax evasion if you don't have the money lmao how you, if you don't have the money you're not evading

One of the worst posters on here.

Do not copy this man or ever take his advice.

 

[R.E.N. Spells Ren]

Even if he netted 1.4m, he wouldnt owe 800k in taxes though so I still dont get it. The most you can pay in capital gains is 20% correct?

Incorrect. Long term capital gains are taxed at a maximum of 20%. Shor term gains are taxed as ordinary income, where the highest tax bracket is 37%.

I still don’t know how 1.4M in short term capital gains + 60k in waged income resulted in a 800k tax bill.

 

[NinoBrown]

Nope

Yup....we are...all my trades are done out of US jurisdiction, no KYC....so fukk the the Feds....

 

[Secure Da Bag]

the losses are disallowed by the 'wash rule' thats why, the tax bill does seem high so the article is missing information but 1.4M x 37% ordinary income tax rate = 518k in taxes is possible

I agree with the bolded. Which is why I said the math doesn't add up. How can he make 1.4M in capital gains income and 45k in profit. Unless, you're telling me that 1.4M in capital gains income is not profit. Which would be strange because you're only taxed on the actual profit. The only scenario would be made an initial profit of 1.4M and then proceeded to flip so many losses that he ended up with only 45k. I doubt this guy is that incompetent. So yeah, something doesn't add up.

 

[R.E.N. Spells Ren]

How can he make 1.4M in capital gains income and 45k in profit.

The article does explain that part...

“This poor soul traded all of the popular stocks you see in the media consistently all year long. . . [but] he never knew anything about the wash sale rules” wrote Wruk. “He booked a profit but was disallowed all the losses because he never once waited the 30 days on those stocks to book the loss,” added Wruk.

The wash sale rule is an Internal Revenue Service (IRS) regulation that prohibits someone from claiming a loss by selling and purchasing either the same or similar securities within 30 days of the sale at a loss. To comply with the rule, investors must wait at least 31 days before repurchasing the same investment. “If people are going in and out of names quickly, and they’re generating losses and have offsetting positions, they’ve generated those losses within 30 days of a purchase, those losses get suspended,” explained Sandi Bragar, managing director at Aspiriant.

So he made 1.400 M in gains but also took 1.355 M in losses that he wasn’t able to claim due to this “wash rule”

Most novice investors have never heard of the “wash rule”.

 

[FukkaPaidEmail]

This tax penalty doesn’t make sense

something is being left out

 

[chineebai]

The math doesn't add up. The losses are added to the cost basis.

 

[chopchop702]

This article is bogus. Your cost basis is adjusted when you do a wash sale. So it balances it out in the end.

Lets say buy 10k worth of stock XYZ. And you sell it for a 1k loss.
The next day you buy 10k worth of stock XYZ again. Because of the wash sale rule, Your disallowed loss is added on to your newest position. So your in the red for 1k in your newest position off the get go. It will be like you own 9k worth of stock XYZ off the rip but you paid 10k for it

And then AFTER you sell XYZ again, whatever your new net gain/loss is the new deal. It washes out the previous 1k loss on your balance sheet and replaces it.

And for all of you wondering how could he have bought and sold 45 million worth of stock over the course of the year. Its actually very possible if you place many day trades everyday and use margin.

Lets say you buy and sell 50k worth of XYZ 10 times in one day. That makes 500k worth of stock trading for that single day.

 

[Secure Da Bag]

This article is bogus. Your cost basis is adjusted when you do a wash sale. So it balances it out in the end.

Lets say buy 10k worth of stock XYZ. And you sell it for a 1k loss.
The next day you buy 10k worth of stock XYZ again. Because of the wash sale rule, Your disallowed loss is added on to your newest position. So your in the red for 1k in your newest position off the get go. It will be like you own 9k worth of stock XYZ off the rip but you paid 10k for it

And then AFTER you sell XYZ again, whatever your new net gain/loss is the new deal. It washes out the previous 1k loss on your balance sheet and replaces it.

And for all of you wondering how could he have bought and sold 45 million worth of stock over the course of the year. Its actually very possible if you place many day trades everyday and use margin.

Lets say you buy and sell 50k worth of XYZ 10 times in one day. That makes 500k worth of stock trading for that single day.

The problem is all his trades were made within 30 days so the wash rule doesn't apply. But even so his tax bill should be no higher 516K, not 800k. Which is why this doesn't add up.

 

[R.E.N. Spells Ren]

The math doesn't add up. The losses are added to the cost basis.

Lets say buy 10k worth of stock XYZ. And you sell it for a 1k loss.
The next day you buy 10k worth of stock XYZ again. Because of the wash sale rule, Your disallowed loss is added on to your newest position. So your in the red for 1k in your newest position off the get go. It will be like you own 9k worth of stock XYZ off the rip but you paid 10k for it

it’s added to the cost basis of XYZ stock, but if XYZ stock never recovers, you never get to claim those losses.

“Buy the dip” can put one in a precarious situations. You buy XYZ at 100, it falls to 80 so you cut your losses. It falls to 50 and shows signs of recovery so you “buy the dip”, but it never gets above 60...so you can’t claim those losses to offset gains your making in other parts of your portfolio.

 

[Higher Tech]

robinhood needs to really have different levels for people
their needs to be an amateur mode for people like this who just want to buy stocks and sell at profit
they aren't thinking about the capital gains tax or how your losses have to be claimed

another financial implosion from robinhood. bankruptcy will make it all better though ain't no way he has that money for the tax bill

Can't discharge taxes in bankruptcy

 

[Deus]

Yup....we are...all my trades are done out of US jurisdiction, no KYC....so fukk the the Feds....

Lol there is no such thing out of US Jurisdiction except for the following:

• Cuba
• Iran
• China (CCP)
• North Korea
• Russia
• Belarus
• Venezuela

And even then it's still iffy.

 

[Bboystyle]

What nikka?

What are you even talking about weirdo? Stay on topic. nikka talking about failing a test

It means to read the article right in front of u u brain dead werido. It explains it for you

 

[NinoBrown]

Lol there is no such thing out of US Jurisdiction except for the following:

• Cuba
• Iran
• China (CCP)
• North Korea
• Russia
• Belarus
• Venezuela

And even then it's still iffy.

Point is....I am not worried and Turbo Tax is magic...

 

[EndDomination]

You can't have 1.4M of capital gains income, but only 45k of profit, and have a tax bill of 800k. None of that math adds up or makes sense.

The taxable income comes from each trade; not from the net amount earned