Gung vf cerpvfryl gur ernfba jul guvf xvaq xvaq bs ernfbavat qbrfa'g jbex. Unira'g lbh ernq hc ba gur cevfbaref qvyrzn? Be qb lbh vzcyl gung YJref jvyy zber yvxryl pbbcrengr guna abg. Gung znl or pbeerpg - ohg bayl vs lbh pubbfr cebonovyvfgvpnyyl. Gur engvbany nccebnpu urer vf gb ebyy n qvr naq qrsrpg jvgu $c= 25%-rcfvyba$ (rcfvyba orvat n ohssre sbe gubfr abg fzneg rabhtu). Gung jvyy znkvzvmr birenyy cre crefba.

A comment on the prize for those who've already taken it:

Qrsrpg frrzf yvxr pyrneyl gur evtug zbir. Gurer'yy or uhaqerqf bs erfcbaqragf fb V'yy unir n znetvany vzcnpg ba gur fvmr bs gur cevmr. Ubjrire, V dhnqehcyr zl punapr bs jvaavat ol pubbfvat qrsrpg. Gung orvat fnvq, V ubcr lbh cvpxrq pbbcrengr.

Would you mind explaining? You could PM me or toss it in the Open thread if you don't think it belongs here.

This was a great post. I'll use it to introduce people to key concepts in the future.

Many of these focus on the posterior's first moment. For continuous distributions, the higher moments matter, too. A test that I expected to lower the variance in my posterior would be considered "confirming" as I use the word. I can't lower the variance before the test is done because it's still possible the mean will change.

Everybody hates the bust, but the real harm is done in the boom, with capital being diverted to things that don’t make sense, because the boom’s distortions make them seem to make sense.

Glenn Reynolds

This was an interesting post.

A potential extension of this problem is to worry about what happens when agents can lie about their utility function. In business this isn't usually a problem, since everyone is trying to maximize profit, but it often is in social interactions.

I'm somewhat puzzled by the notion throughout this thread that you should filter for people with lots of free time. Is this the same community that's interested in Soylent?

I am not a tax lawyer, but I suspect the IRS would treat the put-option sale-thingie as a deposit into your Roth IRA ("substance over form" is a recognized tax law doctrine, at least when it benefits the IRS). Likewise, reversing the process likely would be classified as withdrawing from the IRA. So, the general rules for deposits and withdraws from the IRA would likely apply. If I understand your suggestion correctly, the general rules would prohibit most of what you are trying to do.

In short, I don't think your plan does what you think it does, legally speaking. Whether you would get caught and penalized is a separate question - First, brokerages have lots of reporting requirements, and likely would issue a 1099 or some-such to someone if there were a change in beneficial ownership of an asset. Second, the IRS has an all-but-declared policy of spending a dollar to collect a dime, purely for deterrence purposes.

In summary, aggressive tax techniques without expert guidance is asking for trouble.

Disclaimer to any reader: I am not your lawyer. I am not a tax lawyer. I didn't do any legal research. Don't rely on my opinion for any reason. Definitely don't rely on this opinion to try and pay less taxes. If this is a real issue for you, hire someone to do the research, or do it yourself.

Disclaimer: I am not a lawyer, accountant or investment advisor. I have not tried this, and I'm currently trying to think of reasons why it won't work.

How to Beat the Tax System:

Suppose one had an investment account and a Roth IRA. Suppose further the investment account had a realized gain for the year. From the investment account, one could sell-to-open a way out-of-the-money cash-secured put at a high limit that no one would buy. As long as you're the only open interest, you could then buy your option in your other account. You'd in essence be swapping short-term gains for tax-free savings.

You're hosed if another party rushed in to sell you the put at a lower price, but the savings could easily exceed the cost of commissions if the option is thinly traded enough. I suppose you could just take the market price on both sides, though, if you're willing to repeat the process until the transition goes the "correct" way.

You can withdraw penalty-free from the Roth IRA when you buy your first house. Or, you could simply reverse the process as needed. This could be particularly helpful if one were having a bad year and had lost more than the maximum investment-losses deduction.

Any downsides to this bit of financial munchkin-ism? Does this constitute tax evasion? I imagine it wouldn't be provable for anyone other than me (you're welcome). Are there actually options that thinly-traded?

I don't think the last one is that useful either. Really, anything that can fit in a twitter is unlikely to be useful. And if someone wants to make useful advice that does, they shouldn't be giving generalised messages that can be applied anywhere, but rather highly specific advice with a narrow target audience.