paper loss

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Paper Loss

A loss on an investment that has not yet been realized. That is, a paper loss occurs when the current price of a security which is still owned by the holder is lower than the price the holder paid for it. As a result, it is possible that the paper loss might be erased if the price increases again. A paper loss represents a decrease in one's net worth, but it may or may not affect one's lifestyle. See also: Paper profit.

paper loss

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.

References in periodicals archive ?
The report said that, as with realized losses, AIG accounted for 47 percent of total unrealized losses, and seven large insurance groups accounted for another 35 percent.
Chancery officials stressed that many of the reported department deficits were attributed to those unrealized losses and not on deficit spending.
There's no knowing if those unrealized losses will ever be realized and offset future gains.
($ millions) Full Year 2008 1Q 2009 Net income 91.5 -2,621.9 Net cash from operating activities 47,454.2 5,771.2 Net realized capital gains/losses -19,649.5 -1,992.5 Gross unrealized losses * -124,835.3 -120,407.2 Shareholders' equity ** -117,977.0 116,180.2 Notes: * Includes fixed-income securities and equity securities.
Earnings before unrealized losses on financing activities were $114.7 million, up from $112.2 million in fiscal 2005.
The tire producer will post a 2.5 billion yen net loss in its interim settlement in December as it disposed of unrealized losses in stocks of its sales subsidiary.
Moreover, the company now has ample unrealized losses from foreign securities, they said.
Second, unrealized gains of some assets could offset unrealized losses of others, resulting in no required write-off.
12, unrealized losses for such securities and recoveries of such losses have to be recognized in the income statement for the period.
Currently, securities dealers are allowed to value inventories using the lower of cost or market (LCM) method, which permits them, when calculating taxable income, to take into account unrealized losses on inventory positions without having to account for unrealized gains.
One, which was not caused by the filing of a consolidated return, involved unrealized losses when P sells S.