Can you switch from Realized gains/losses and then use Unreal. gains WITHOUT re-computing the basis?

Question

Is it anywhere said that you can not switch from calculating gains/losses using Realized gains/losses and then switching to Unrealized gains WITHOUT re-computing the basis?

Textbooks, IRS code, FASB, anything? A specific source would be very helpful.

Thanks

Answer 1

The problem with this is semantics. "Realized" means gains/losses from things that have been sold. "Unrealized" means a gain/loss from something you still own. If you bought a Corvette for $10,000 and is now appraised at $12,000, you have an unrealized gain of $2,000. If you sell it, you now realize the gain.

I'm thinking you are referring to a mutual fund. They buy and sell stocks all the time. When they sell the stocks, they have a realized gain that they pass to the owners of the fund. There is no way to convert the mutual funds realized gain to unrealized gain. Sorry.

Hopefully this answers your question.

Answer 2

not sure what you're asking here. Either the asset was sold or it wasn't. If it was then you compute the realized gains and you pay the tax. If it wasn't sold then you compute unrealized gains but aren't taxed on them. The only time unrealized gains are relevent are inside a retirement plan and that's just a reporting feature on the 5500 not a taxable event.

Answer 3

Methinks not. Tell you what. Why don't U go find where you think you can pull off such a maneuver?

You want to calculate gain or loss when you haven't sold something yet? Only a dealer in securities or similar dealer can use the mark-to-market method and only with advance approval of the IRS.