primary note = ordinary income
secondary note = ordinary income
charge off = capital gains loss
sale of note, or recovery after charge off = capital gains gain/loss
is this correct?
i'm still confused how to even calculate this... say i lent $25 at 5% and a borrower started repaying in jan 2018. at this point i've collected about 8.99, of which 7.92 was principal and 1.07 was interest. i assume my tax form is going to have a box (summing up all my notes) and stating i owe taxes on 1.07?
reporting on this stuff alone seems an argument to only fund an account with roth ira funds...
Yes, you got it pretty much right. Interest is ordinary income. Sale and default are capital gain/loss.
LC sends you a form 1099.
You copy the numbers to your tax forms.
You don't need to itemize every loan.
LC has tax guides for several years. At the bottom of this post it also mentioned they have an option that works with with Turbo Tax.
I didn't see at 2018 tax guide but here is the 2017:
https://help.lendingclub.com/hc/en-us/articles/216706817-2017-Downloadable-Tax-Guide
If you use TurboTax to work out your tax returns, you can have LendingClub tax forms automatically imported into TurboTax and it's done. No manual number entry required.
https://help.lendingclub.com/hc/en-us/articles/220044828-Importing-LendingClub-tax-forms-to-TurboTax-a-step-by-step-guide