So how does taxing unrealized gains work. If I purchase stock X at a specific price. If the stock goes up and I now am holding 150% of my original value. Let’s say it hovers there for 3 more years. After 3 years it tanks and is now worth only 50% of my original purchases. Are people suggesting that I pay taxes on the unrealized gain of 50%, even though I end up selling at loss and have realized negative value. Doesn’t that mean I am being taxed on losing money? How does that make sense?

Frankly I feel like the better option is to just not let people borrow based on stocks at all. Even if you paid in at X price, there’s no guarantee it’ll still be at X price or greater when the loan comes due, so to speak.

I mean, in the UK, we see the “loan against unrealised, paid off to a zero tax position” trick as the disguised remuneration package that it is.

In fact, it only America, out of the western nations, that allows that.

You took payment of a sum of money, specifically related to unrealised gain. Therefore, the gains are realised.