Poor judgement, stockmarket losses. Now can't afford to pay tax

I now find myself in a prediciment coming up to the tax deadline.

I sold stock in the company I work for (my life savings) witholding CGT and reivested it in some "high growth" stocks. During the intervening time I was very ill with stomach cancer, my attention was diverted and I never sold.

My stocks are now worth 20% of their investment value.

They will come back when interest rates normalise and the economy improves. If I have to sell now to pay the tax I'd wipe out an investment of €700K and my life savings.

I have no other means to pay the tax liability.

Thoughts?

I've been internalising this enough so go easy.

Whatever happens, engage with Revenue from the get-go. For you, this means first thing Monday morning in light of the impending deadline. They can be accommodating where the financial circumstances of the customer are challenging. Maybe seek a phased payment arrangement with them to discharge the liability over time?

However, I wouldn’t expect them to be overly sympathetic to you as regards your losses on speculative investments, so whether you choose to identify this as your issue is up to you.

If you do default on filing and payment obligations, they’re quite prompt these days at issuing Final Demands with immediate follow up enforcement activity (Sheriff, Court Debt Recovery or Attachment). You lose your tax clearance when a default occurs and are charged interest.

Bakewell said:

My stocks are now worth 20% of their investment value.

They will come back when interest rates normalise and the economy improves.

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Maybe they will, maybe they won't.

Bakewell said:

If I have to sell now to pay the tax I'd wipe out an investment of €700K and my life savings.

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You've lost 80% of your investment, I'm sorry to say. Finding some way to hold onto these stocks won't change that fact.

Bakewell said:

My stocks are now worth 20% of their investment value.

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Bakewell said:

If I have to sell now to pay the tax I'd wipe out an investment of €700K and my life savings.

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When did you sell the shares to trigger the CGT liability?
If you did that this year, then you can sell your new shares and set the losses against your CGT liability.

If you sold the initial shares last year then the CGT was due last year although the the return is due now.

Can you give us the actual numbers.

But if you have a CGT liability which you can repay with the proceeds of sales, then you should sell it.

At least you will be solvent.

If you become insolvent then your problems will be far worse.

Brendan

Sold the shares in April '22.
Purchased the shares for 35K and sold them for $135K
I invested this $135K in parrallel with $570K (savings) in a few EV stocks that are now down 80% so what was once $700k or so is now down to just over $125K.

I'm going to do a "Money Makeover" anyway cause I've a whole load of other things going on here Brendan.

Bakewell said:

Sold the shares in April '22.
Purchased the shares for 35K and sold them for $135K
I invested this $135K in parrallel with $570K (savings) in a few EV stocks that are now down 80% so what was once $700k or so is now down to just over $125K.

I'm going to do a "Money Makeover" anyway cause I've a whole load of other things going on here Brendan.

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Okay, so if you generate a loss now in 2023, you can’t carry that back to 2022.

You owe the Euro equivalent of circa $33,000, plus potentially circa 8% interest because that tax was due on 15 December 2022. Best to pay the tax and hope the interest demand doesn’t follow.

You should just sell at least $33,000 worth of stock and pay the tax bill.

Let’s look at the Money Makeover to help you with the remaining stocks and your overall position. I worry about these ‘high growth stocks’ as I’m not familar with much that’s down 80%.

Agree fully with Gordon.

Your first priority is to simplify your life and you do not want any Revenue problems hanging over you.

So pay your tax immediately and if that means selling $33k worth of shares, so be it.

Brendan

By EV stocks do you mean Electric Vehicle?

What is done is done, but putting your life savings in one sector was not a good idea.

If you started off with $570k savings, that suggests you have a very high income and will be able to recover financially in time. You will have the benefit of losses forward.

Just checking one thing, as you mention dollars and didn't pay the tax when it was due. I assume you are living in Ireland and subject to Irish CGT?

Brendan

Bakewell said:

Sold the shares in April '22.
Purchased the shares for 35K and sold them for $135K
I invested this $135K in parrallel with $570K (savings) in a few EV stocks that are now down 80% so what was once $700k or so is now down to just over $125K.

I'm going to do a "Money Makeover" anyway cause I've a whole load of other things going on here Brendan.

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hi bakewell ,really sorry for your situation. What made you put your life savings into these stocks and what type of stock did you make the big capital gain on, it must have been that that led to the over confidence, was that also an EV stock?

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