If A guy looses a fortune ($10 to $15 million) .............Can he deduct his losses?

[jackd1959]

Yes, some people can't pull the trigger. I remember Nortel fondly. Okay, not so fondly.


The next generation

> http://www.go2web20.net/

Fortunatley, I had created the JD when it doubles sell half philosphy before my initial NORTEL purchase but I still had 400 shares when it tanked. $32,000to $200 pretty fast.

My worst move was a $5000 investment in company called Stratacom back in the early 90's. Within two years it was worth over $120,000. In the mid 90's they were purchased by another tech company... I didn't have time to do my normal research and didn't like the "numbers" (Price to earnings, Price to sales, price to book and such) so I sold and moved the profit into Fortune 500stuff. Had I taken the shares of the "purchasing" company it would have been worth over $10,000,000 by 2000. The "purchasing" company was Cisco Systems.

Anyone, who loses $800,000,000 is an idiot unless he lost buying a hockey team because he's a real fan or he's worth $8 billion and didn't really care.

 

[C Dick]

C Dick,

I suspect many of the self-made fathers are too busy running their businesses to sit down to teach their children the skills to operate a successful business. Secondly, the self-made fathers could have gotten lucky in a business venture and really couldn't explain the reason for their successful business.

C Dick, any of your children able to manage your company if something happens to you tommorrow? If so, you are way a head of your game with all the exit strategies ready to be executed.

I certainly don't claim that it is easy to pass on the success. I have thought about handing my company on to my kids, I don't know if it will ever happen. There is a lot that I do that they could not do, and they have lots of skills that I don't, so they would have to remake it to fit them. Certainly there are elements of luck and circumstance in any success, the son may be no less talented, just less lucky.

What gets me is not when a son fails, it is when a son is arrogant and believes that he is a businessman, because his Dad gave it to him. If the son is hard-working and humble, that is good. And I accept arrogance from self-made successes, because they did earn it, even if they were lucky. But when you inherit, you are not entitled to act like you earned it, in my opinion.

 

[m91us]

But when you inherit, you are not entitled to act like you earned it, in my opinion.

I see what you are getting at. You are focusing on the attitute of the person who inherited the money.

One suggestion to overcome this attitute by their adult children is slowly dripping the money into their hands. Slowly giving the money to the adult children forces them to actually go out and earn it on their own and not be dependent on Dad's money. They will be forced to save and build up capital if they want financial independence.

 

[C Dick]

I see what you are getting at. You are focusing on the attitute of the person who inherited the money.

One suggestion to overcome this attitute by their adult children is slowly dripping the money into their hands. Slowly giving the money to the adult children forces them to actually go out and earn it on their own and not be dependent on Dad's money. They will be forced to save and build up capital if they want financial independence.

Yes, that is what I am getting at. Another suggestion would be to have multiple kids, and make them compete for it, winner takes all. Perhaps whoever can make the most money on their own gets to take over the family business. Of course that could also scar them for life.

 

[m91us]

Yes, that is what I am getting at. Another suggestion would be to have multiple kids, and make them compete for it, winner takes all. Perhaps whoever can make the most money on their own gets to take over the family business. Of course that could also scar them for life.

Based on your remarks you are a big supportor of Darwin's view of "Survival of the Fittest." Suppose your daughter lacks business savvy to make business decisions to generate profits. Yet, she has a caring and compassionate personality. You dislike her husband and sense a divorce is lurking around the corner for your daughter. Do you make plans to ensure your adult daughter is looked after when you're gone? Or do you hand the business to the other adult child and give the cold shoulders to your daughter?

On a different note, multiple kids doesn't solve the problem. They may not be interested in the family business. Perhaps other career aspirations in the minds of the adult children.

 

[wonkyknee]

up 800million on paper and now only 1million???...a little far fetched that anyone is that stupid. At 800million how does somone not even take 100million off the table...or 50million for that matter?...Sounds like it was all in options, but even more reason to hedge your bets. Someone sophistacated enough to play the options, or have a broker manage your accounts for 800million couldn't be that naive.??

 

[tboy]

up 800million on paper and now only 1million???...a little far fetched that anyone is that stupid. At 800million how does somone not even take 100million off the table...or 50million for that matter?...Sounds like it was all in options, but even more reason to hedge your bets. Someone sophistacated enough to play the options, or have a broker manage your accounts for 800million couldn't be that naive.??

Yeah, it makes one wonder just how stupid someone can be. I mean even if you simply deposit it into a bank you can negotiate a better interest rate than us mere mortals get. I mean, he probably could have gotten 10% which would give him an income of $80M per year before taxes.

I kind of think the subject of this whole thread is kind of dodgy at best.

Having said that many lost their shirts through this little company called Bre-X.

 

[C Dick]

Based on your remarks you are a big supportor of Darwin's view of "Survival of the Fittest." Suppose your daughter lacks business savvy to make business decisions to generate profits. Yet, she has a caring and compassionate personality. You dislike her husband and sense a divorce is lurking around the corner for your daughter. Do you make plans to ensure your adult daughter is looked after when you're gone? Or do you hand the business to the other adult child and give the cold shoulders to your daughter?

On a different note, multiple kids doesn't solve the problem. They may not be interested in the family business. Perhaps other career aspirations in the minds of the adult children.

No, my first priority would be to take care of my children. Passing on the business is separate, in a lot of cases the best thing for the kids would be to sell the business, and split the money. There is so much emotional baggage involved in passing on the business, proving you are worthy of the old man, etc. I see it a lot in my customers, where the son rarely measures up, because the Dad makes him run the business the Dad's way.

 

[C Dick]

Yeah, it makes one wonder just how stupid someone can be. I mean even if you simply deposit it into a bank you can negotiate a better interest rate than us mere mortals get. I mean, he probably could have gotten 10% which would give him an income of $80M per year before taxes.

Often the majority share-holders are not allowed to sell after the IPO, so they could be worth $800M on paper, but not allowed to sell before it plunges. I personally know of two cases:

- Two guys had a dot-com, they got a shady promoter to talk the stock up, so that the market cap was over $500M, they were each worth over $100M on paper. But not allowed to sell, the company was bankrupt before the freeze period was over. They are still multi-millionaires though.
- A guy had a good business, I knew him pretty well. Netting him personally over $2M per year, no debt, mansion, nice family, etc. But huge ego. First he threw out his partner, and took on a bunch of debt to buy him out. Then he disagreed with all his managers who said he was pushing too hard, and fired them all. Company went bankrupt. So he took all his personal money and started a new company, to prove it would work if he did it his way. Burned through all his cash, wife left him. He was literally left with the clothes on his back, no house, no cash, nothing, from being worth $10M+. He could so easily have put some away, but his ego was so huge that it never occured to him. He has tried again, but failed, he is not really a businessman, he just got lucky one time. Now he has just a regular divorced guy with a job, just like anyone else. But he knows where he was.

 

[wikiwild]

Fragmentation, thou art Web 2.0.

look for a major market consolidation with Facebook, Google, Yahoo, MSN, etc.. either buying out or replacing some of the little startups.

Twitter.com is a good example, there's a shitload of companies out there doing 'one thing really well', but that ONE thing's value is kind of suspect.

Facebook implemented their 'status' feature and that will be the death of Twitter.

 

[dcbogey]

With regards to passing money or a business on the kids - follow the actions of the Oracle of Omaha and just give it away. Leave them enough to be "comfortable" and if they have it in them, they will make it on their own merits.
For an example of how not to do it, see the Bronfmans.
I believe there is a saying (and I may not have this exacly right) the first generation makes the money, and the next loses it.

 

[scrooge]

As others have said in this thread (and in my prior posts), this is not the place for tax advice.

Given that it is now 2007, the expiry of non-capital losses (from businesses or allowable business investment losses) is nearing.

By the way, non-capital losses incurred in 2006 and onwards are available for carryfoward for 20 years.

 

[Doctor Zoidburg]

Hey Scooge,

This is the LOUNGE, a place for discussion of all types. I find it amazing that I can come in here and ask advice or answer questions for others so that they may benefiet from my experience and I from theirs.
While I would not apply any advice I get in here before checking it out , it is still helpful to get the opinion from others.