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If you buy 5 ABC @ $10, the price goes down to $1, you then buy 5 ABC @ $1, the prices goes up to $6. You sell 10 ABC @ $6. So the gain you make is $5. While the average price is $5.50, are you still taking a loss on the 5 shares @ $10?

How is this reported on income tax returns? As a loss, gain, or both?

2007-07-18 02:51:19 · 6 answers · asked by Paper M 1 in Business & Finance Taxes United States

6 answers

You report your net gain/loss for the year.

The tax liability comes in the year that you sell the stock. You have to report when you bought it, at what price, how many shares, and your net proceeds.

You do that for each stock you've sold, and the net result is your capital gain or loss.

2007-07-18 02:54:59 · answer #1 · answered by Scotty Doesnt Know 7 · 1 0

Your basis is $55.00 in a 10 share stock sale for $60.00. You have a short term gain of $5.00. Reported on Schedule D and taxed as ordinary Income. Some folks would like to make this much more complicated. The only thing the IRS will ever see is a sale of 10 shares on a given date for $60.00. They are owed tax on a $5.00 gain. If you report two sales you have a really good chance that the IRS will send you a CP2000 under reporting notice demanding tax on the $60.00 sale they believe you did not report. Your return has two $30.00 sales and they are happy to get the tax but now they want the tax on the $60.00 sale that they have a 1099b for and they will assume the basis is $0.

2007-07-18 03:39:16 · answer #2 · answered by ? 6 · 0 0

You report your sale of $60, and your total basis of $55, for a $5 short term gain. You'd put "various" in the column for date purchased. Your $20 loss on the first 5 shares is thereby netted out with the $25 gain on the last 5 shares.

2007-07-18 03:25:03 · answer #3 · answered by Judy 7 · 1 0

You don't say anything about the timing of the purchases. If you make a sale of the first shares using specific identification of those shares you would have a $4 per share loss that would be shown on schedule of your tax return. If you purchase the second batch of shares within a period that is thirty days before or after the sale then the loss would not be deductible under the wash sale rules.

2007-07-18 05:48:39 · answer #4 · answered by waggy_33 6 · 0 0

You report the $5 gain on Schedule D. How long did you hold ABC? If less than one year, then it's a short-term gain. If more than a year, then it's a long-term gain. Long-term gains are taxed a little less than other income.

2007-07-18 04:38:00 · answer #5 · answered by Omar B 2 · 1 0

costly W: Your brokerage assertion will element all your buys and sells so which you have not have been given the liberty to %. and chosen. you will desire to have a purchase for each sell except you short a inventory. definite you're superb they are all short term. long term is any subject over a million 3 hundred and sixty 5 days. additionally remember in case you re-purchase with in 30 days of a loss the wash sale regulations kick in. this suggestion replaced into based on the tax regulation in effect on the time it replaced into written because it applies to the info which you supply. click on my profile to study greater. Errol Quinn Enrolled Agent

2016-10-21 21:58:03 · answer #6 · answered by ? 4 · 0 0

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