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Messages - PennySaved

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136
Interesting.

We don't know very much about how LC is adjusting the basis it's reporting on the 1099-B; if as you say they are tracking closely, it could be that LC is calculating the basis adjustment property, which is an encouraging sign. 

Your OID and actually interest received should be pretty close, but if you had a loan go late for 4 months and paid no interest, then there should be a difference, if LC is applying the law correctly.  OID instruments accrue OID until they are declared worthless, and on LC a charge-off generally occurs 4 months after payments stop.  So there should be some accrual in there that would get moved into your basis on a charge off event.

Another possibility is that, if all of your notes are small, the OID effect on basis is so small that it isn't being captured.  Aggregated over a portfolio, however, those little bits add up.  I haven't had time to actually run the OID numbers on small notes so I don't know. 

I think everyone is just trying to do their best with the tax issue.

All my loans are small, $25 each.  For each of my charged off loans in 2012, the 2012 OID interest reported on Form 1099-OID was slightlyLESS than the actual interest collected on each loan.   So there was no reported accrued interest for the months the borrower should have been making payments before the loan was eventually charged off. 

Lending Club sent me an email on Feb 7 saying they would be" issuing corrected 2012 IRS Forms 1099-OID and 1099-INT in addition to providing a new IRS Form 1099-B for recoveries of principal amounts from previously charged-off loans by February 19, 2013."  So maybe they calculated the OID amounts wrong on the 2012 form 1099-OID I downloaded.   I will be closely comparing the new 1009-OID for my charged off loans with the individual interest payments on those loans.  Also will be interesting to see what they report as losses for those chargeoffs on Form 1099-B

137
From the cardholder agreement
FEES RELATED TO THE SERVICE
All fees will be withdrawn from your Card Account and will be assessed as long as there is a remaining balance on your Card Account, except where prohibited by law. Any time your remaining Card Account balance is less than the fee amount being assessed, the balance of your Card Account will be applied to the fee amount.

I had read on another blog about a similar prepaid debit card with savings account (called Mango), that as long as you had no balance on the prepaid card, you would not be assessed the monthly fee.  As you can see from the language above, if you had an account balance of zero on the card, then they would not be able to charge the $4.95 fee.

138
I am also interested in checking out this account.  My reading of " funds must be transferred from the PayPal Prepaid Card account to the PayPal Prepaid Card Savings Account" is that your transfer funds from the prepaid card account, not the prepaid card itself.

To see what the fees are, From the application link in the first post, click on the link on the left where it says “some of the Cards basic fees.”  It will take you to this information.

HERE ARE SOME OF THE CARD'S BASIC FEES
SEE THE CARDHOLDER AGREEMENT FOR THE COMPLETE LIST OF CARD FEES.
Monthly Fee
(UNLIMITED* Signature- and PIN-Purchase Transactions)   $4.95
Domestic ATM Cash Withdrawal Fee**   $1.95 each
Balance Inquiry Fee at an ATM   $0.50 each
Balance Inquiry Fee—online, via toll-free telephone call, or real time alerts.***   No fee
* Remember, you will not be charged any fees for this card account until you add funds to it. Once you do add funds, your card account will be subject to the $4.95 monthly fee which gives you the ability to make unlimited purchase transactions, subject to funds availability. We suggest that your first value load to the card should be at least $10.
** ATM owner fees may also apply.
*** We do not charge a fee for your use of real time alerts; however, check with your mobile carrier about text message rates.

Also, iff you scroll to the very bottom of the application page, click on “Cardholder Agreement”
https://www.paypal-prepaid.com/account/terms/PayPal_Cardholder-Agreement_01Nov11.pdf
At the very end of the cardholder agreement is a longer fee schedule. 

Also on the bottom of the application page, is a link to FAQs.

One of the FAQ:
Q. What is the maximum amount I can spend each day using the PayPal Prepaid MasterCard®?
A. To comply with Federal regulations, there are limits affecting how much money can be loaded, withdrawn, and spent by each PayPal Prepaid Card cardholder.
The maximum amount you can spend or withdraw varies by type of transaction. This chart shows the current limits.
Type of Transaction   Dollar Limit
Purchases   $4,999.99 every 24 hours
Over the Counter Cash Withdrawals   $4,999.99 every 24 hours
ATM Cash Withdrawals   $325.00 per withdrawal; $940.00 per day, up to 6 per 24 hours

139
I am totally confused by the OID numbers and how to use them to adjust basis for losses.  In 2010, I only had two charge-offs, one at Prosper and one at Lending Club.  But I did not have that many loans.  Then I ramped up my investment.  I did not have any chargeoffs in 2011, but now I have 21 loans charged-off in Lending Club.  This is the first year I am getting OID reported from Lending Club.  Before I just used the interest total from the year end statement for reporting interest income on my taxes.  From what I can tell, my total 2012 OID reported from Lending Club is less than the total interest reported on the year end statement.  The difference seems to be about the year's total of service charges,which I calculated from each month's statement. 

When I go and look at my charged-off loan list in Lending Club online, the table list show  Accrued interest column as zero for all charged- off loans.   I went and tallied the 2011 and 2012 interest for each charged off note and compared it the 2012 OID reported for each note.  In all cases, the 2012 OID was just a little less than the 2012 interest reported by looking at each individual loan's payment history.  The slight difference, mostly a cent or two per  loan, is due to the service fees.  So I don't think I need to adjust anything on my basis for figuring capital loss on the charged off loan as bad debt.  All I need is the unpaid principal amount per loan.  I got that easily from the CSV download file filtered for the charged off loans.  Then I just had to delete the few loans that were charged off prior to 2012 and the couple charged off in 2013.

I have not bought or sold any loans in 2012, so I could see where accrued interest and OID interest numbers may have to be used in figuring basis for loss.  But not for my charge-offs.

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