When selling securities, do you only report your gains for taxes?

Question

Let's say I buy 100 shares of ABC at $5/share. I sell when the stock goes up 1 point. I make 100 dollars in this transaction with out fees. When I report this sale on my taxes will I get taxed on the $100 gain? Or will I be taxed on the $600? Furthermore, in the same example, if I lost 1 point and I sold at $4/share when I report my losses it goes as $100 dollars so I won't be taxed, correct?
I basically need to know, when I sell stock, do I put some money aside for tax from the $100 gain or from the total sale?

Thank you for your help!

Answer 1

Just the gains for $100, You will be asked for you cost and sell price, and you'll end up with the difference.

If you have capital loss, -$100. Your income will be lowered when you deduct the $100. The government pays for some of your loss.

Answer 2

Two factors to consider:

1) your overall net gain
2) over how long of a period are you realizing the gain

If you've gained $100 in a transaction, you'll be taxed only on the amount of that gain. But let's say you have another offsetting transaction with a $25 loss - then you'll be taxed on a net gain of $75. That's why, if you've realized a gain and also happen to be sitting on some other dog of a stock that you don't expect to go up, you should sell to offset your gain.

Whenever possible, you want to hold onto securities for at least 12 months, because then you'll be taxed at the long-term capital gains rate of only 15%, and not a higher short-term capital gains rate.

Answer 3

You are taxed on the gain, not on the entire selling price since some of it is just getting your own money back.

On schedule D you'll show the selling price, your basis (what you bought it for plus expenses like broker commissions), and the difference which is your gain or loss.

So in your first example you'd report cost basis $500, selling price $600, and gain $100 (which is what you'd be taxed on). And with your second example, cost basis $500, selling price $400, loss $100. If you have gains and losses in the same year, you add them together and pay taxes on the net gain. If you have a net loss, you can take $3000 of it off of this year's other income - if your net loss is bigger than that, you "carry over" the rest to next year.

There's one other kicker with stock sales. A stock held for over a year is called a long-term gain or loss; something held a year or less is called short term. They are reported on separate sections of the schedule D. Long-term gains are taxed at a lower rate.

Answer 4

keep good data. Any earnings you're making, upload this below the class of "different earnings," on your federal earnings taxes. If ebay is greater beneficial than a interest employer, get a cpa to establish your books. while tax time comes, you're able to have a finished of employer earnings, losses, pension witholdings, etc. As a disclaimer, my tips could be incorrect, so continuously ask a expert, while it is composed of money concerns.

Answer 5

Duh, Yes. But if you kept the securities more than 2 years you may not have to pay the tax.