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<p>[QUOTE=&quot;Cloudsweeper99, post: 765239, member: 3011&quot;]This is a frequent mistake in thinking.&nbsp; If you sell or don&#039;t sell, the gain is always the difference between cost and fair value.&nbsp; If you are preparing accounting statements, it is called unrealized gain or other consolidated income.&nbsp; If you are preparing a tax return, it is taxable income only when you sell.&nbsp; So if you are measuring wealth, it is a real gain.&nbsp; If you are preparing C corporation financial statements, it is unrealized and booked as a change in equity until you sell.&nbsp; If you are preparing a tax return, it is profit when sold.</p><p><br /></p><p>Selling doesn&#039;t create a gain.&nbsp; It locks the gain at a certain dollar amount and requires a tax payment in the quarter when sold.&nbsp; By the definition above, Warren Buffett doesn&#039;t have an economic gain in his Berkshire Hathaway holdings.&nbsp; The nonsense behind this thinking is evidenced by the fact that banks will lend him money based on his shares, which some people insist have not been a profitable investment.[/QUOTE]</p><p><br /></p>

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