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[Wiz Imp]

21. Unrealized gains

https://www.jacksonhewitt.com/tax-help/tax-tips-topics/personal-finance-savings/unrealized-gains-tax/

Unrealized gains are profits on investments or assets that have increased in value but haven't been sold yet.
While unrealized gains can boost your net worth on paper, their value can change with market fluctuations.
Unrealized gains don’t affect your available cash or income until you sell the asset.
Unrealized gains are not considered income and are not taxed until they are realized.
You do not need to report unrealized gains to the IRS since no transaction has occurred.

google.com/search?q=why+unrealized+gains+as+loan+collateral+should+be+taxed&sca_esv=d6124646a290b296&rlz=1C1SJWC_enUS1101US1101&sxsrf=AE3TifN4i8wwM8hc9kk01o-5d57BVqzWNQ:1757903295526&udm=50&fbs=AIIjpHxU7SXXniUZfeShr2fp4giZPH5QghoXViUOqdFyhkUfHhA90f6RZnLvcDKUWyhDavFBbFz95fUCRtZA8InbyClGBqM49Q8OnQl7hXsLUbA9H70VAnicGA7PNKoCOJQW_yvbHY-6ZtXXMM9M5ODEPE7xAX_brhOp6cXOZYKxNEtwcFKVZU2MeDQxmVaQEbqbUlOmOOA0ECsVAYwVHBGu1-ITeziCdw&aep=1&ntc=1&sa=X&ved=2ahUKEwje1OqL3NmPAxV1q4kEHcQ5N6sQ2J8OegQIERAE&biw=1536&bih=695&dpr=1.25

Advocates argue for taxing unrealized gains used as loan collateral to close loopholes that disproportionately benefit the ultra-wealthy. Under the current system, wealthy individuals can use their appreciating assets (like stocks) as collateral to take out loans, effectively accessing their wealth without selling the assets. Since the gains are never "realized" through a sale, they can defer—or, upon their death, completely avoid—paying capital gains taxes.

This practice is often referred to as the "buy, borrow, die" strategy. A wealthy individual buys assets, borrows against their appreciated value, and then their heirs inherit the assets with a "stepped-up" basis equal to the market value at the time of death. This stepped-up basis effectively erases any tax liability on the unrealized gains that were never sold.