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  1. #1

    Default How to Calculate Active Appreciation when Trading Stock with Separate Property Funds

    My question involves a marriage in the state of: California

    I own stock from a company acquired prior to marriage. No pre-nup. Considering selling my stock now and looking to buy other stocks and possibly day trade them.

    I understand the definitions of active and passive appreciation, but as it relates to stocks it seems to be grey and open to interpretation. Where "market forces" determine if active or passive. I guess my question is at what point is it "market forces"? Generally it's always market forces. If I buy and hold for a year does that make it passive appreciation? What if I trade 100 times (buy stock and sell stock) a year does the appreciation remain passive? Is it 50 times per year? Or 10?

  2. #2
    Join Date
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    Default Re: How to Calculate Active Appreciation when Trading Stock with Separate Property Fu

    ...

  3. #3
    Join Date
    Sep 2010
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    19,378

    Default Re: How to Calculate Active Appreciation when Trading Stock with Separate Property Fu

    You've got two issues here.

    First, how long you hold it has squat to do with anything. If the original investment is separate property and you don't do anything to it as part of your married estate (that the appreciation is due only to market pressures), then the appreciation is passive and also seperate property. If you bought GOOGLE at $500 before you were married and sell now at $1000, that is all your separate property (of course there's capital gains to consider). If you had stock in a company you worked for while married, that would possibly be a different story.

    Now once you sell the asset, you have to be very careful what you do with the proceeds. If you do any comingling of those proceeds with your marital funds, they now become marital property. If you intend to buy and sell things that started as seperate assets and wish them to remain so, you need to keep those isolated.

  4. #4

    Default Re: How to Calculate Active Appreciation when Trading Stock with Separate Property Fu

    Quote Quoting flyingron
    View Post
    You've got two issues here.

    First, how long you hold it has squat to do with anything. If the original investment is separate property and you don't do anything to it as part of your married estate (that the appreciation is due only to market pressures), then the appreciation is passive and also seperate property. If you bought GOOGLE at $500 before you were married and sell now at $1000, that is all your separate property (of course there's capital gains to consider). If you had stock in a company you worked for while married, that would possibly be a different story.

    Now once you sell the asset, you have to be very careful what you do with the proceeds. If you do any comingling of those proceeds with your marital funds, they now become marital property. If you intend to buy and sell things that started as seperate assets and wish them to remain so, you need to keep those isolated.
    Thank you for the answer!

    The funds would always stay separate. Yes it would be the example of buying GOOGLE stock and selling it. Wouldn't buying and selling at some point be considered "marital effort"? How much effort constitutes, or would be considered, active appreciation rather than passive? Or would all my buying/selling (as described or illustrated here) be considered passive?

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