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Messages - Boatguy

#1
Investors - LC / Email from Lending Club
June 01, 2016, 11:00:00 PM
https://forum.lendacademy.com/index.php?topic=3894.msg35546#msg88888888Quote"> from: fliphusker on June 02, 2016, 01:43:25 PM
#2
It would take us 3-5yrs to fully unwind our positions in LC so patience seems warranted.  I've been investing and buying loans in LC for 8yrs so I'm past worrying that it's a Ponzi scheme.

They have a lot of cash on hand which means they can lose money for quite awhile.  In fact if I was Sanborn, I'd tell the investors he's building for the future and to expect losses for the next two years; the Amazon approach.  Sanborn has a very rich and unique opportunity here to do things the RL perhaps was incapable of doing.  He's been handed a well funded "turn around" which is not usually the case.

LC can return to the original pitch and build the retail investor base with new products and new approaches.  Profits won't be as rich, but they wont' be living at the whim of institutional investors.
#3
Investors - LC / LC declining stock price: a signal?
January 06, 2016, 11:00:00 PM
#5
Investors - LC / First LC results scheduled for when?
January 23, 2015, 11:00:00 PM
Lockup ends six months after the IPO, so June.
#6
Investors - LC / Folio and IRAs
April 09, 2014, 11:00:00 PM
https://forum.lendacademy.com/index.php?topic=1674.msg18973#msg18973">Quote"> from: twigster on April 09, 2014, 10:38:35 AM
#7
Investors - LC / Folio and IRAs
March 13, 2014, 11:00:00 PM
#8
Investors - LC / Folio and IRAs
March 10, 2014, 11:00:00 PM
The money never leaves your IRA so why would the IRS care?  It's no different than having an IRA at a brokerage and buying or selling a stock, the proceeds/profits/losses stay in the IRA.  It's only a taxable event when the proceeds leave the IRA.

Foliofn is just a broker, not a custodian.

I populated my IRA almost entirely from Foliofn last year (i.e., transferred in cash from another IRA and bought notes on Folio) and have not seen any negative consequences.
#9
Investors - LC / Taxes - a sanity check
March 10, 2014, 11:00:00 PM
https://forum.lendacademy.com/index.php?topic=2130.msg18193#msg18193">Quote"> from: jpildis on March 11, 2014, 07:53:41 PM
#10
Investors - LC / Taxes - a sanity check
March 09, 2014, 11:00:00 PM
I don't know exactly where it gets reported, but I'm sure there is a line or form somewhere.

The tricky part is that LC does not report defaults to the IRS at all (see the note on the 1099B).  The IRS has no way to verify the number we would insert as an ordinary loss (or as a cap loss for that matter) which seems like an invitation to an audit.

Very different than a brokerage 1099 which clearly shows the ST and LT cap gains/losses.
#11
Investors - LC / Taxes - a sanity check
March 05, 2014, 11:00:00 PM
Three years ago I concluded that the tax treatment of LC notes was so awful they weren't worth holding in a taxable account and shuffled my money so that my LC allocation was in an IRA.  2011 was not a great year for LC notes so I'd like to run the logic by this esteemed group and see if my logic checks out.

These numbers are round for the simplicity of discussion, but I think they are valid for discussion.  Let's assume a $10,000 portfolio of Grade C notes.  Rounding off the numbers, grade C has an average rate of 15% and a default rate of 5%.  Let's also assume that my tax rate on ordinary income is 30% and 15% on capital gains.  Here is how I see this playing out after tax.

Interest income = $1,500
Charge offs = $500
Net cash = $1,000
Pre-tax gain = 10%

OID Income = $1,500
Income tax = 30% x $1,500 = $450
Offsetting capital loss (assumes I have other cap gains) = 15% x $500 = $75

After tax cash = $1,000 - $450 + $75 = $625
After tax return = 6.25%

And if I was in a max bracket at 45% combined fed + state (California) and 20% on cap gains it would look more like this:

Income tax = 45% x $1,500 = $675
Offsetting capital loss = 20% x $500 = $100
After tax cash = $1,000 - $675 + 100 = $425
After tax return = 4.25%

This is for Grade C notes, for Grade D/E/F notes it is much worse since the taxable OID income goes up much faster than the charge off cap loss offset.

Does this example look pretty accurate to you guys?