How can this be done with max savings

[Pacun]

C corporation was formed to invest in the stock market and bought houses for rent.

Let's say that the rental portion has a loss of $1k after depreciation, short term gains in stock is $6K and long term gains are $100,000. 

What rate will be used to pay taxes on the $6K ST and at what rate will be use to pay taxes on the $100K LT?

If the money is left in the C corporation for future investment, no taxes will be paid by the owners. Will this situation be better if a partnership is formed? If both partners make $100k in W2, I believe that will change everything.

Thank you for your thoughts and suggestions.

[Abby Normal]

Yikes! A Personal Holding Company? Haven't had to think about that in years.

https://www.thetaxadviser.com/issues/2020/jul/beware-personal-holding-company-tax.html

[Lee B]

4 hours ago, Pacun said:

C corporation was formed to invest in the stock market and bought houses for rent.

Let's say that the rental portion has a loss of $1k after depreciation, short term gains in stock is $6K and long term gains are $100,000. 

What rate will be used to pay taxes on the $6K ST and at what rate will be use to pay taxes on the $100K LT?

If the money is left in the C corporation for future investment, no taxes will be paid by the owners. Will this situation be better if a partnership is formed? If both partners make $100k in W2, I believe that will change everything.

Thank you for your thoughts and suggestions.

Is this an actual client or a hypothetical scenario?

[Pacun]

Hypo, but I was thinking of investing in crypto now and hold it for 2 years (remember this lapse) and then buying a rental or two after the money is pulled out. Anyone is welcome to steal my idea and thank me later. 

[Sara EA]

Um, Pacun, you do realize that in two years you could have zero.  If you buy the rentals now, in two years they may be valued more, maybe less, but you'll still have something.  And you also must realize that although your initial post said to corp would be "investing in the stock market," crypto is not stock.

[Max W]

12 hours ago, Pacun said:

C corporation was formed to invest in the stock market and bought houses for rent.

 

C-corps do not get to take LT capital gains on stock market transactions, nor can they take losses, capital and otherwise.  They can on be taken forward or back and applied against gains.

[Lion EA]

Corporations also are not good entities to own real estate.

[Pacun]

What's the trick for stocks/crypto? Timing. So, as I am writing this, these are the prices:

Bitcoin $27,500
Eth $1,850
QNT $113
Gala .4
RNDR $1.73

Just to name a few

Will see them in a year and then in two years. 

"C-corps do not get to take LT capital gains on stock market transactions, nor can they take losses, capital and otherwise.  They can on be taken forward or back and applied against gains."

"Corporations also are not good entities to own real estate"

I guess my idea will work better to do it as a regular tax payer and file Sch D and E along the 1040.

Thank you for your replies and again, you can steal my idea and thank me in two years. 

[Lion EA]

Just prepared a return for a single gal who bought a fraction of a Bitcoin a couple years ago when it was over $43,000. If it'd been a whole Bitcoin and she sold it after two years, she'd have had a loss of $15,500 per your prices and only $27,500 in US$ to put a down payment on a rental property. She wouldn't be able to buy a rental or two, not even one here in Fairfield County. Would you have enough in DC?!

If she'd bought a rental property a couple years ago with $43,000 down, would she be in a better or worse situation now two years later? Be very careful with digital assets!

If your ultimate goal is to own a couple rental properties, do your planning now. You can probably think of several pathways to ownership.

[Pacun]

Her timing was bad. I have been there and the lesson has been learned but this time is different. With lesson in my favor and $50K to invest, I would buy right now the following:

100 QNT coins at $110 each = $11,000
10,000 RNDR coins at $1.75 each = $17,500
1,000 AVAX coins at $17 each = $17,000
112,500 GALA coins at .04 = $4,500

In a year and then in two years, I will check how much each coin costs and multiply by the coins "I would have bought but I didn't because I was a polo or I didn't have the money".

Remember that my investment is for 2 years, then I would buy real estate and two years later, I would used that real estate as collateral to get $500K, to invest again. The numbers are above and with math, we will see what happens. 

Remember.... someone said, bitcoin can change the world but the world cannot change bitcoin.  Why not bitcoin in my selections above, because I am greedy and a gambler. 

 

 

[mcbreck]

Warren Buffett says that if you offered him all the Bitcoin in the world for a total price of $25 he would pass.

Cathie Wood says Bitcoin is going to be priced at $1m per in 7 years.

Crypto is not an investment as it offers no ability to perform a discounted cash flow analysis. It is a speculative instrument like gold or Beanie Babies.

[BTS]

Look at all the Crypto companies currently in bankruptcy.    Safest way to invest in crypto is as a "Miner".   Buy or build a couple dedicated miner PC's or Asic Miner and let it go to work.  Helps if you own your own Nuclear Power Plant to runs these energy hogging miners too !!!  

[ILLMAS]

1 hour ago, BTS said:

Look at all the Crypto companies currently in bankruptcy.    Safest way to invest in crypto is as a "Miner".   Buy or build a couple dedicated miner PC's or Asic Miner and let it go to work.  Helps if you own your own Nuclear Power Plant to runs these energy hogging miners too !!!  

Exactly, a high school custodian saved $17,000 on electricity by using the school power on a handful of machines.  

[Sara EA]

I have a client who has been a miner for years, long before it was the in thing.  He just put in a solar farm to help power it.  In all these years, he has never earned enough crypto through mining to cover his gigantic electric bill.  It may take lifetimes to cover the cost of the farm.  I suppose if the price of the crypto he earned has gone up a whole lot in value these costs may be covered. 

[Pacun]

There are huge companies with the best computer farms and there is no chance for regular people to be profitable mining. If you have $300 a month for electricity, you are better off buying $300 in coins every month. 

[BTS]

Back in 2021, I did some research on mining and did an cost profit analysis.  Below is part of the post we had posted.  Granted in todays video card and electric costs profit will shrink.  Our electric doubled this past year.  Current electric delivery rates in our area are around .10 to .11 cents per kilowatt hour.  Again the post below is from 2021 when bitcoin was "In the News" and electric was around .048 per kilowatt.  

 

 At current values (hash rates, difficulty rate and bitcoin price) a single Radeon 570 pc rig would earn around $3.00 - $3.50 per day (after operating costs).  Thats $1,095 profit a year.  Now build a PC rig with 6 Radeons would earn you $6,570 profit a year (at current values).   A 6 card pc rig would cost roughly $1750 to $2,000 to build.  After 4 months the rig is paid for.  Now the latest ASIC Miners can earn you up to $250 a week or $13,000 per year.  At current levels.  But they cost around $6,000 to buy.   An ASIC would pay for itself in 6 months.  So in the long run ASIC's are the way to go.  I predict bitcoin will be around $5,000 per coin in about a month (if not sooner).    And with the governments around the world on the fence about cryptocurrencies, that alone is making shit volatile.     Now if the governments come to a consensus and acknowledge cryptocurrencies, well one could see bitcoin shoot up to $100,000 in a few years.  But then again, they could all go belly up !!  Very interesting and unpredictable investment.

[Pacun]

On 4/24/2023 at 6:07 PM, Pacun said:

Her timing was bad. I have been there and the lesson has been learned but this time is different. With lesson in my favor and $50K to invest, I would buy right now the following:

100 QNT coins at $110 each = $11,000
10,000 RNDR coins at $1.75 each = $17,500
1,000 AVAX coins at $17 each = $17,000
112,500 GALA coins at .04 = $4,500

In a year and then in two years, I will check how much each coin costs and multiply by the coins "I would have bought but I didn't because I was a polo or I didn't have the money".

 

I am a bit early than a year but here we go:

Based on current prices:

100 QNT at $104 = $10,400 for a loss of $600
10,000 RNDR at $7.38 = $73,800 for a profit of $56,300
1,000 AVAX at $36.89 =$36,890 for a profit of $19,890
112,500 GALA at $0.03 =$3,375 for a loss of $1,125

So:
-600
56,300
19,890
-1,125
Profit equal to: $74,465.  
As someone suggested, invest BIG, so let's say you had half of million to invest: Profit $740,465.

Another point, soon after I posted the above last year, the two founders of GALA sued each other, so at that point, I would have sold GALA and purchase another coin that might not be in huge loss. The parabolic bull run has not started but I will post in March or April next year.