So let's say there's a scenario like this:
+At the start of 2020 I decided to buy a $500 options on Tesla.
+Tesla stock performed really well and by the end of 2020 say I had like a $1mil profit.
+I got spooked by the bubble and realized my $1mil profit before 2020 ends.
+2021 comes around and I use my 1 mil money to invest in the next big company.
+Turns out it's Nikola and my $1mil evaporates into like $100 overnight.
So the way I understand how tax works is that I still have to pay around $420k of tax in 2021 for my gain in 2020. Even if I sell my Nikola stock then the loss wouldn't be counted in until 2022. Is this correct? If so, it sounds like I'm screwed if I just have average income that in no way allow me to afford $420k. Is there anything I can do if I get caught in this kind of situation?
Of course, I know the sensible thing to do is prolly set aside $420k before continuing to invest. But I'm just presenting a scenario to know how to account tax into my investing strategy. Thank you.
Submitted January 02, 2021 at 09:39PM by Investing_bot62529 https://ift.tt/35ltAsv
