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It's not about deferring a recognized gain. As soon as I control my income whether because I am managing it because I am a business owner or managing how I liquidate capital assets, I can do things like keep my income low enough to qualify for ACA subsidies. If I need more income I can take more in one year, enough to cover say two years of excess and then move my income back down the following year to again qualify for subsidies.
From the post I was responding to:
Quote:
Something about all their wealth being in capital such that gains only occur when a sale is made, and then it is capital gains, which is taxed at a low rate. But they defer that and receive public assistance, because qualifying for that is based on income.
The claim is that the sale is made, but the gain is deferred. That has nothing to do with a business owner managing their income.
And the question remains, how is the gain from the sale deferred?
I agree based on the exact wording of the prior poster you cannot defer realized gains, but I believe the spirit of what they were trying to say is someone who earns income through capital gains can still receive public assistance by picking and choosing when they realize their gains.
I can realize 500k in gains one year, receive no benefits, and then realize 30k per year for the next 5 years and for each of those next five years I can receive subsidized health insurance, food stamps, and who knows what else and my effective income over the 6 year period is 108k per year.
The ability to defer gains and choose when to receive your income is highly valuable.
Quote:
Originally Posted by TaxPhd
From the post I was responding to:
The claim is that the sale is made, but the gain is deferred. That has nothing to do with a business owner managing their income.
And the question remains, how is the gain from the sale deferred?
Location: Formerly Pleasanton Ca, now in Marietta Ga
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Quote:
Originally Posted by 2sleepy
Well, I think that citizens united should be nullified and we should eliminate all lobbyists, ban PACs and Super PACS and publicly finance campaigns, so with "what I think" and $4 I can get a cup of coffee
The claim is that the sale is made, but the gain is deferred.
You misunderstood. Gains on capital are deferred until the sale is made. If you own stock that doesn't pay dividends, gains are deferred until it's sold. Same with property that isn't rented, precious metals, art, collectables, etc. You could be very rich in assets (including car and house paid for), and do fine with a low income.
Keep your income below the poverty line and you get free healthcare, no deductible, no copay. Based on what it costs me for the cheapest plan with a maxed out deductible, I figure that's worth ~$10k/yr off the top.
I agree based on the exact wording of the prior poster you cannot defer realized gains, but I believe the spirit of what they were trying to say is someone who earns income through capital gains can still receive public assistance by picking and choosing when they realize their gains.
I can realize 500k in gains one year, receive no benefits, and then realize 30k per year for the next 5 years and for each of those next five years I can receive subsidized health insurance, food stamps, and who knows what else and my effective income over the 6 year period is 108k per year.
The ability to defer gains and choose when to receive your income is highly valuable.
The highlighted portions above are inconsistent. Once the gain is realized, it can’t be deferred.
I agree with the rest of your post, and there is nothing inconsistent with what I’ve said.
You misunderstood. Gains on capital are deferred until the sale is made. If you own stock that doesn't pay dividends, gains are deferred until it's sold. Same with property that isn't rented, precious metals, art, collectables, etc. You could be very rich in assets (including car and house paid for), and do fine with a low income.
I didn’t misunderstand anything. A gain doesn’t exist until the asset is sold, which is exactly what you were talking about, highlighted below:
Quote:
Originally Posted by rruff
Oh and this is an interesting tidbit. I was talking to an investment advisor who informed me that he knew a lot of wealthy people who have low or no income. Something about all their wealth being in capital such that gains only occur when a sale is made, and then it is capital gains, which is taxed at a low rate. But they defer that and receive public assistance, because qualifying for that is based on income.
You are just wrong. Once realized by selling the asset, the gain can’t be deferred.
The issue that you brought up in the post that I responded to.
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