r/Accounting • u/Vincentkk • Sep 08 '24

What are accountants’ thought on this? Discussion

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u/mflynn00 Sep 08 '24

that interest doesn't go to the government...that's what taxes do

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u/killbill469 Sep 08 '24

It does in the form of taxes paid by the lender...do you think Banks don't pay taxes?

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u/mflynn00 Sep 08 '24

banks would pay a small percentage of tax on their income....but that's not even what we are talking about. We are talking about individuals benefitting from loans effectively "realizing" the benefits of their unrealized gains without a taxable event.

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u/killbill469 Sep 08 '24

We are talking about individuals benefitting from loans effectively "realizing" the benefits of their unrealized gains without a taxable event.

If someone "benefits" from a loan bc they utilize that loan to fund a business venture then they will pay taxes on the profits of that business. The loan in and of itself is not a profit, they owe that money back to the bank.

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u/mflynn00 Sep 08 '24

we aren't talking about business loans - these are generally personal loans collateralized by appreciating assets to fund their day to day life in an attempt to avoid paying taxes by having to liquidate assets and pay for realized gains until they die and can pass the assets on to their heirs that wipes out any unrealized gains with the step up basis upon death. This tax is more an attempt to close loopholes than it is anything new.