Interesting. I found this article and it states:

>Unrealized income or losses are recorded in an account called accumulated other comprehensive income, which is found in the owner’s equity section of the balance sheet. These represent gains and losses from changes in the value of assets or liabilities that have not yet been settled and recognized.

They interchange income and gains. So income are gains and gains are income. Now, I'm leaning towards answer A since capital gains are income regardless if they are realized or not.

I happened to be on the phone with my credit card company and I asked them what they thought. The CSR put me on hold for 5 minutes and told them they are not financial advisors and they can't give me advice on how to answer that question. I'm trying to answer their question accurately and they can't give me additional details on it. To be fair, it's not the bank's question but a Federal rule/guideline.

I could make a case for any of the answers. I'm going to investigate how public companies report their income from unrealized capital gains. It might not be an apple to apple comparison

Looks like someone point you in the right direction on how to report the lost.

As a side note, you can report a max of $3k total loss per year. However, if you have capital gains, your carryover capital loss is used against that.

Concrete example:

Tax year 2022, You take the $20k loss. You had no capital gains. You'll have a $3k capital loss with a $17k carryover capital loss.

Let's say in tax year 2023, you have $5k capital gains from sell stocks. So, you'll use $5k of your carryover for that and then you'll use another $3k as a capital loss. On your taxes, you'll have a -$3k capital gains and a ($17k-$5k-$3k) $9k carryover loss.

Let's say in tax year 2024, you don't have any capital gains so you take a $3k capital loss using the carryover loss. Now your carryover is $6k.

Let's say in tax year 2025, you have $10k capital gains from selling stock. You will use all of your carryover capital loss and report a capital gain of $4k.

Your tax software will do this automatically for you. I've had a large capital loss carryover and the next year I realized a bunch a capital gains to wipe out my carryover. I look at that carryover as giving free money to the IRS that I want back ASAP.

Thank you. This is my understanding as well. What would you self report on the credit card application?

To expand on your comment that they electronically verified income, it sounds like they will pull your credit report and look at how much you spend per month on your credit cards and other loans to estimate your monthly expenses and then look at how much you pay down on those to estimate your income. I'm imagine their model is robust but that is the data plus estimating your housing cost that they will look at.

It feels like you can put any value in that income field if you feel you can defend your position if they question you about it. So, I'm leaning towards answer A.

Applying for a mortgage is very different than applying for a credit card. In my situation, I have talked to banks and they aren't interested in underwriting me with a typical mortgage since my income that I report on my taxes is so variable. I do qualify for asset based mortgages which tend to have a higher interest rates.

As a side note, I have been unemployed and still successfully gotten credit cards. I think it's combination of my passive income and having a credit score that hovers around 840.