I'm thinking of buying some stock. Does owning stock affect your IRS return if you don't sell?

Question

I'm curious if owning stock will affect my tax return next year. I know selling stock is counted as income but curious about if you don't sell.

Answer 1

You have 3 answers saying NO. Let me clarify that just a tad. If you buy shares of a stock that does not pay a dividend, then the answer is definitely NO. If however, the stock does pay a dividend, you will have to pay taxes on the dividend.

If the stock you buy happens to be stock in a closed end fund, the year end dividend can be substantial.

Answer 2

Individual stocks do not issue annual capital gains like mutual funds do so your tax return will not be affected in that regard until you sell. But, if the company is big enough, and profitable enough (with exceptions of course, Warren Buffet's Berkshire Hathaway to be precise), it will issue dividends each year, those you will have to pay taxes on, unless held in a 401k, or IRA.

Answer 3

Any gain or loss is unrealized until the stock is sold so until then there is no taxable event. However, keep in mind that if the stock pays cash dividends during the year you must report the dividends as income during the year in which they are received even if the dividends are reinvested.

Answer 4

If you buy stock and hold it then you do not pay taxes on the unrealized gains.Capital gains taxes will be due in the tax year that you actually sell the stock.

Answer 5

once you sell short, you're able to save fairness on your account because of the fact of this many business enterprise will require you to maintain a margin account once you sell short. once you sell short there's a credit on your account from the sale of the inventory alongside with different fairness which you have in the two your margin and/or money account. once you're short, the account is "marked to the industry" meaning if the value of the inventory is going up, you're required to deposit monies in the account or money is taken out of your margin account, once you sell short, your brokerage business enterprise borrows the inventory, no longer you. And while the business enterprise borrows the inventory they provide the money equivalent to the industry value of the inventory they are borrowing. So the lender is roofed considering the fact that they have been paid in complete for the inventory the lent out. once you have a short & a margin account you're required, by ability of regulation to hold a minimum of 25% fairness or $2,000 so your account will by no ability fall under 0 once you purchase the inventory lower back, the acquisition volume is used to off-set the credit you won once you bought the inventory short. If there is money left over, that is yours, if no longer, they charge your margin or money account and because you have been required to have fairness in the account you're able to no longer be required to place out additional money, on an identical time once you purchase lower back the inventory, the inventory is then dropped on the lender who will return the money they won while they lent the inventory

Answer 6

No.