My point is it's easier to gamble when you have corporate tax advantages.
These are rich people/companies putting non-existential amounts of money into something new in the off chance it pays off. Best case scenario they get even richer, worse case scenario they pay a lot less in taxes. Either way their lifestyle/needs will be met and the business will continue.
For the average individual: Best case scenario they get rich. Worst case scenario their investment goes to zero or close to it and they get a max 3k tax deduction on their taxable income. Their lifestyle/future savings could be greatly impacted by the loss, certainly far more than the businesses/rich people in question would suffer.
What I meant was, how is any of this an argument for investing specifically in Bitcoins?
In any case, if a corporate makes an investment and loses the money, you are correct that this will lower the tax base and hence the total taxes paid, but that will of course only cover a small part of the loss.
I don't know the tax implications for individuals in the US investing in stocks, but in Sweden there's not much difference if you're a company or an individual, you'll still be able to deduct losses.
Finally, if a company invest a large part of their capital in Bitcoin and it goes to zero, that is just as catastrophic for the company as it would be for an individual, it just depends on how much of the "savings" were invested.
Well it's good to be an investor in Sweden I guess, if theoretically you could write off your entire capital loss and pay no income tax, like a US business could. As far as the US goes it's capped at a $3000 loss barring some special circumstances.
I was just opposing the "Rich people and businesses are getting into it! That means the value is bound to go up and makes it a good investment for me!" attitude I was seeing in the comments. The super rich and large corporations have disposable incomes and options that make buying bitcoin considerably less risky than it would be for the average retail investor.
"We hold and may acquire digital assets that may be subject to volatile market prices, impairment and unique risks of loss.
In January 2021, we updated our investment policy to provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity. As part of the policy, which was duly approved by the Audit Committee of our Board of Directors, we may invest a portion of such cash in certain alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds and other assets as specified in the future. Thereafter, we invested an aggregate $1.50 billion in bitcoin under this policy and may acquire and hold digital assets from time to time or long-term. Moreover, we expect to begin accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt.
The prices of digital assets have been in the past and may continue to be highly volatile, including as a result of various associated risks and uncertainties. For example, the prevalence of such assets is a relatively recent trend, and their long-term adoption by investors, consumers and businesses is unpredictable. Moreover, their lack of a physical form, their reliance on technology for their creation, existence and transactional validation and their decentralization may subject their integrity to the threat of malicious attacks and technological obsolescence. Finally, the extent to which securities laws or other regulations apply or may apply in the future to such assets is unclear and may change in the future. If we hold digital assets and their values decrease relative to our purchase prices, our financial condition may be harmed.
Moreover, digital assets are currently considered indefinite-lived intangible assets under applicable accounting rules, meaning that any decrease in their fair values below our carrying values for such assets at any time subsequent to their acquisition will require us to recognize impairment charges, whereas we may make no upward revisions for any market price increases until a sale, which may adversely affect our operating results in any period in which such impairment occurs. Moreover, there is no guarantee that future changes in GAAP will not require us to change the way we account for digital assets held by us.
Finally, as intangible assets without centralized issuers or governing bodies, digital assets have been, and may in the future be, subject to security breaches, cyberattacks or other malicious activities, as well as human errors or computer malfunctions that may result in the loss or destruction of private keys needed to access such assets. While we intend to take all reasonable measures to secure any digital assets, if such threats are realized or the measures or controls we create or implement to secure our digital assets fail, it could result in a partial or total misappropriation or loss of our digital assets, and our financial condition and operating results may be harmed."
I’d say the main difference here is not the tax treatment, it’s the relative amounts - most private individuals could also afford to invest 10% of their cash savings in something very risky.
Add to that the fact that the people making the investment decisions at companies are not personally completely dependent on the outcome. Worst case scenario they can get another job.
