My full year losses were nearly 80% of the interest I earned. My early years with LC this ratio was more of a constant 33%. My last few months, the losses have exceeded my interest earned. This better improve soon. I've stopped reinvesting my taxable account for the foreseeable future.
Same here. I wonder what LC's most recent quarterly report is going to say. I would imagine a lot of people are pulling their money out. I'm currently at a 1-2% return this year. No reason to keep my money with them.
I wonder as well. I'm surprised we haven't seen any lawyers poking around for "negligence" or any of the many other terms used when one doesn't live up to their fiduciary duties. If one does show up and is successful- I would get onboard. I have $40K in losses since day one between two accounts that I'd like to get some of back. In the meantime I'll continue to sell my low FICO notes and replace them with better ones.
Does really amount to $40K if you offset it with gains on your taxes or the using the rolling $3K annual tax claim a deduction against the loss?
My rough example with numbers rounded off:
Interest Earned: $25,000
Losses in Past Years: $8,000
Losses in 2016: $20,000
I believe I am in the 28% tax bracket, but I could pay long term capital gains tax of only 15%.
If I had no other stock sales:
In past years I would have had a profit of $17,000 and paid tax of 0.28*(25,000-3,000)= $6160 and I could carry $5,000 losses to a future year.
Last year I had a profit of $5,000 and will pay tax of 0.28*(25,000-3,000) = $6160 and I could carry $17,000 losses to the future.
But note that I will now pay more in tax than I actually made in profit!
Now I do have capital gains that I can offset with my $17,000 loss. Let's just say $10,000 worth....so now I will get that 10,000 gain tax free (a savings of $1500 since it was long term gain). But I had to pay $2800 in tax on $10,000 in interest that I didn't really earn from Lending Club because of my losses. So it has the effect of wiping out the benefit on the Long Term Capital Gains tax rate. It uses up my deduction that would eventually be worth $2800 to wipe out a tax of $1500.
This was somewhat manageable when losses were around a third of interest paid. But now that they are 80+% (and over 100% the last few months). This investment makes no sense in a taxable account. :-(