paper profit


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Paper Gain

A gain on an investment that has not yet been realized. That is, a paper gain occurs when the current price of a security is higher than the price the holder paid for it, but the holder still owns the security. As a result, there is the possibility that the paper gain might be erased if the price goes back down. A paper gain represents an increase in one's net worth, but it may or may not affect one's lifestyle. See also: Paper loss.

paper profit

Paper profit (or loss).

If you own an asset that increases in value, any increase in value is a paper profit, or unrealized gain. If you sell the asset for more than you paid to buy it, your paper profit becomes an actual profit, or realized gain.

The same relationship applies if the asset has lost value. You have a paper loss until you sell, when it becomes a realized loss.

You owe no capital gains tax on a paper profit, though you use the paper value when calculating gains or losses in your investment portfolio, for example. The risk with a paper profit is that it may disappear before you realize it. On the other hand, you may postpone selling because you expect the value to increase further.

paper profit

(1) An increase in the value of real property, so one has a profit on paper even though the property has not been sold.(2) The profit from an income-producing property that has an accounting profit on which the owner has to pay income taxes, but that has a negative cash flow requiring cash infusion from the owner in order to pay bills. This can occur if debt service payments are high, because only the interest portion is a deductible expense, even though the owner must write checks for interest and principal.It can also happen if customers or tenants are not paying their bills on time, so that the receivables are large, or if the property owner must expend large sums of money making upgrades or repairs that must be capitalized rather than written off as expenses.

References in periodicals archive ?
According to the Financial Times, the US government has a paper profit of almost USD11bn on its 34 per cent shareholding in Citigroup, Inc.
6p - adding to the taxpayer's paper profit on its 70 per cent shareholding - while the re-newehopes of an economic rebound lifted Lloyds Banking Group 0.
The buyers of the offering, who got a discount on Google's market price, already have a small paper profit.
While that move gave Whitman an immediate eye-popping paper profit of $42.
So someone who bought PS2,000 worth of stock back then will be sitting on a PS600 paper profit.
Both banks have been trading at levels that give the taxpayer a theoretical paper profit.
As things stand, taxpayers have a paper profit of pounds 1.
9% shares gain saw taxpayers return to a paper profit of more than pounds 1bn on the holding.
9 per cent shares gain saw taxpayers return to a paper profit of more than pounds 1 billion on the holding.
its parent company, had entered into a series of "side deals" in connection with this public offering which would (i) shield it against the anticipated drastic drops in the price of NewPower common stock, while (ii) enabling it, through a series of paper transactions with various "Special Purpose Entities," to reap an immediate paper profit of $370 million on the sale of NewPower warrants and shares.
The latest Sharesave scheme has just paid out to workers, leaving 17,698 of them sitting on a paper profit of pounds 50.
On a positive note, tax payers are now sitting on a paper profit as the shares are trading at around the 70p level.