Since inflation weakens the purchasing power of the dollar, whatever dollars you have sitting in your bank account are worth less. Can you deduct this from your taxes as a capital loss?
No because income is measured in dollars.
OP you should definitely try this and report back.
probably. the IRS is understaffed anyway and no way they’ll catch you doing this
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Just make sure you state all your key assumptions.
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Back in the 1970s, there were serious discussions about adjusting for inflation driven profits. Buy inventory and sell six months later, for example. Or, build a building, set up a depreciation schedule based on the original purchase price. Use the building when prices are higher and the replacement cost is higher, but continue to report on the original depreciation schedule.
For individuals, certainly some of your tax is the tax on “investment returns” that don’t do anything except maintain the purchasing power of your principal. Ordinary workers can avoid this with tax qualified savings plans, higher income/wealth people can’t. IMO, a good thing. Asset taxes on the wealthy are okay. Complaints from the wealthy about inflation are more likely to be heard than complaints from the middle class.
buy house with fixed mortgage.
wait for hyperinflation, sell loaf of bread for 1 million, pay off mortgage.
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Using inflation-adjusted asset prices for determining capital gains and paying tax on only real interest income have been suggested in Canada for 50 years by wild-eyed income tax critics. Zero chance of either ever being adopted but at least tax brackets and credits are indexed.
I thought we already had a thread on this, or possibly the reverse: taxing deflated dollars.
But the bottom line is that the income is taxed in dollars and those can’t inflate or deflate against themselves.
Not for long…maybe…
I’m laughing at the idea that Biden is going to hire 10,000 new employees at the IRS.
Is there currently a lot of unemployment for accountants? Maybe they can outsource those new jobs overseas to India or something…
or rent it out for $500M a month
just pay your taxes with dirt. Let us know how it goes
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If you could deduct the effect of inflation on your dollars, wouldn’t that imply that you’d have to pay your tax liabilities using uninflated dollars.
Props to OP for having a posting style that I unequivocally recognize from just the thread title every single time.