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Becker FAR book --
Chapter 3, page 5, Lecture
Tim Gearty mentions there is a temporary difference between GAAP rules and Tax rules on when income is recognized for trading/available for sale securities.
My question: Aren't unrealized gains actually recognizable in TAX under "capital gains"? Making it a taxable obligation for investors?
No - investment gains and losses are only recognized for tax purposes when the investment is sold.
from Rady - I think deferred tax liablities to be recorded as the book income is higher than the taxable income and un realized gain will be taxable amount in the future when the securities to be sold so this revenues rcognized in the book income and it will be taxable income in the future
from Ayesha - For tax purposes, unrealized g/l are not recognized. Only when the security is sold is the actual g/l realized
Video from Rob @ Pederson CPA Review: