Stock Tax Question (1 Viewer)

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I invested $80 last year in a stock that has yielded $580. If I sell that stock and use the $580 to purchase 6 shares of another company, I am still on the hook to pay the $500 of capital gains, correct?
 
I invested $80 last year in a stock that has yielded $580. If I sell that stock and use the $580 to purchase 6 shares of another company, I am still on the hook to pay the $500 of capital gains, correct?


I’m going to piggyback on this question.. if i had a stock that yielded similar returns last year- let’s just say $80 and yielded $580, to keep it simple- but i DIDNT sell it, and it since has gone back down to, say $480.. so I’m still way ahead, but haven’t sold it or technically “taken” any profit.. am i still on the hook for taxes, or not until i sell it?
 
Not yet a year.

How close to a year? If it's close and you have options, hang on to it. Remember also that gains are cumulative and in total (so if you have losses as well, that will bring the gain down).
 
I’m going to piggyback on this question.. if i had a stock that yielded similar returns last year- let’s just say $80 and yielded $580, to keep it simple- but i DIDNT sell it, and it since has gone back down to, say $480.. so I’m still way ahead, but haven’t sold it or technically “taken” any profit.. am i still on the hook for taxes, or not until i sell it?
There are no tax implications (assuming no dividends) until you sell it.
 
How close to a year? If it's close and you have options, hang on to it. Remember also that gains are cumulative and in total (so if you have losses as well, that will bring the gain down).

I guess this only matters if your income rate is higher than the LTCG rate. Short term is taxed as ordinary income so it might not really matter depending on that rate.
 
I guess this only matters if your income rate is higher than the LTCG rate. Short term is taxed as ordinary income so it might not really matter depending on that rate.

Well now that you bring that up, if your AGI is below 45k (or so), you aren't subject to CG at all, which is nice.
 
How close to a year? If it's close and you have options, hang on to it. Remember also that gains are cumulative and in total (so if you have losses as well, that will bring the gain down).

Looks like June 26th, so I'll wait. Hopefully the other stock doesn't blow up ;)
 
Looks like June 26th, so I'll wait. Hopefully the other stock doesn't blow up ;)

Do the calculation on whether it makes sense to hold it. Is your long term rate lower than your income rate? Or as buzd pointed out, if you’re below the gains threshold it doesn’t matter anyway - no tax.
 
Do the calculation on whether it makes sense to hold it. Is your long term rate lower than your income rate? Or as buzd pointed out, if you’re below the gains threshold it doesn’t matter anyway - no tax.

Yep, there are different implications depending on the situation. With several moving parts to making the best decision, the math has to be done to figure out what the optimal scenario would be.
 

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