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Technology Stocks : Zitel-ZITL What's Happening
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To: Michael who wrote (17908)6/5/1999 10:16:00 AM
From: Daniel Chisholm  Read Replies (1) of 18263
 
Hello Michael,

May I call you "My Friend" too? ;-)

You wrote:

... hence defer huge tax bills. I have a free loan, that is invested in Qualcomm QCOM....

As you state the loan is "free" (the loan we're talking about here is the ~30-40% portion of the capital gain that is (eventually) due in taxes, but freely available for investment in the meantime, along with the rest of the unrealized short sale profit), in that you don't have to pay any interest on it.

But it's actually even better than that. The interest-free "loan" of the deferred taxes that you are receiving is also forgivable in the event that you invest it and lose money on your investment. Any capital losses you generate on your investment of the (freed-up) short sale proceeds can be used to offset capital gains taxes you would otherwise owe on the short sale profits.

So it's even better than investing money that you've borrowed at 0% interest, because if you win you win, and if you lose you don't have to pay it back! It is the safest form of leverage available.

I'm sure you understand what I've described, the reason I have written this is more for the benefit of anyone who hasn't really caught on yet to the incredible power and beauty of tax deferment and investment growth compounding.

As you would write, "sure is a nice day".

- Daniel
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