If you lose $100 in the stock market and then made back the $100, do you have to pay taxes on it?

Question

Or could you say that you didn't make any money in the stock market and so you don't have to pay any taxes?

You know, since your net amount is zero.

Answer 1

It depends. If it happened in the same calendar year, then no, you wouldn't owe any taxes on it, since your loss would offset your gain. The only problem with that would be if you sold a stock at a loss and then bought the same stock back within a 30 day period. This is called a "wash sale" which the IRS dissallows the loss from. If it happened in 2 different years then you would possibly owe taxes on the $100 that you made back. If you have a loss on a stock you can deduct the loss, up to a maximum of $3,000 per year ($1,500 if married filing separately). The excess above the $3,000 you could carry forward and use it at $3,000 per year, or offset the loss against future gains. You would have to report both the $100 loss and the $100 gain though, but if you did it in the same year, your net loss/gain would be zero, and no taxes owed on it.

Answer 2

What you "lose" & "gain" is really just on paper until you sell it.

If you own stock for the entire year and you do not sell it, regardless of whether it gained or lost value, there are no tax implications. There is a fundamental difference between realizable gains & losses and realized gains & losses.

Realizable gains & losses are G&Ls that are on paper only...they would be the gain/loss that you would incur if you sold the stock at that point in time.

Realized gains/losses are the gains & losses from having sold the stock.

If I own 1 share of stock in XYZ Company which I bought for $5, it went up $2 during the 1st half of the year ($2 gain) and then lost $4 in the 2nd half of the year (5 + 2 - 4 = $3 and thus a $2 loss) I would have a $2 REALIZABLE loss. If I sold it on December 31st at the $3 value its now at, it goes from a REALIZABLE loss to a REALIZED loss.

Also, as previously mentioned, if you sell a stock for a loss and is repurchased within 30 days before or after the sale date, the loss on the wash sale is disallowed for tax purposes. If a stock is sold resulting in a gain and it is repurchased within 30 days, the taxpayer cannot use "substituted basis". Instead he must pay capital gains tax and use the new purchase price as the basis.

Answer 3

If you purchase a stock (it is not compensation for employment), then you only pay tax on it when you sell it. If the stock goes down and up but you do not sell it, there is no tax due.

All the following is assumed to happen in the same year.

If you sold a stock for a loss of $100, you get to deduct that loss. If you then repurchased the stock (after waiting at least 30 days) and then sold it for $100 gain, you would have a $100 capital gain. Net capital gain is zero, no tax due.

If you did the two transactions within 30 days, you would not be allowed to deduct your loss but would have to pay tax on the gain.

Answer 4

If it's in the same year, you wouldn't pay taxes on it. You net your gains and losses before taxes are determined.

Answer 5

No tax. Your capital loss would offset your capital gain. Net effect is zero.

Answer 6

I'm not sure the answer is as simple as it seems . . . but maybe. You "lose" on paper and "gain" on paper regularly. I think the answer to your question depends on the net result on 12/31/xx.

Answer 7

you break even, no tax.