Capital gains tax question regarding investments?

Question

Hi I'd like to know if one has to pay taxes on capital gains when:

After selling a security (stock, bond, commodity, currency, etc) and gaining profit from it you re-invest your profit within say another four months or so?

If all the profit is then re-invested do you have to still pay taxes?

Thanks

Answer 1

The gain on the sale of stocks is taxable. If you sell within one year, it is short term gain, which is taxed at your normal tax rate. If you sell the stocks after one year, you have long-term capital gain, which is taxed at lower tax rate.

Answer 2

There are potentially two taxable events with a foreclosure of a rental property. 1) Forgiveness of Debt: The difference between what the bank sells the property for and what you owe on it is taxable if it is forgiven by the bank. If you are insolvent at the time of the forgiveness, this could be non-taxable up to the amount of the forgiveness. However, when calculating insolvency, you would have include all of your assets and liabilities. 2) Capital Gain/Depreciation Recapture: The difference between your basis and what the bank sells the property for is subject to Capital Gains Tax and a tax on the depreciation recapture. The only exception to this rule is for primary residences. It does not apply to rental property. Before you do anything, sit down with an experienced tax pro and run some numbers. Bottom Line: You walked away from the refinance with a bunch of cash and the IRS/State is going to want some of it now.

Answer 3

If you have a gain, you have to claim it and pay any tax due, no matter what you do with the money, reinvest it in the same stock, invest it in something else, spend it on a new car or anything else, or give it away or light a match to it.

If you sell at a loss and buy back the same stock within 30 days, that's called a wash sale, and you can't deduct the loss right away, you roll it into your basis on the replacement stock.

Answer 4

Yes, you will pay taxes on the gain. So, for example, if you bought $100 worth of stock in ABC company, and sold it for $150, you would pay taxes on the $50. Then, if you reinvested the money in XYZ company, you would also pay taxes on any gains you had when you sold that stock.

The only exception is with real estate, where you can do a 1031 exchange if you sell an investment property, and roll the money into another like-kind investment property within 6 months.

Answer 5

Yes, under the current tax code, capital gains tax must be paid on the sale of the security without regard to what you do with the proceeds of the sale. Reinvestment will not change that result. There have been some proposals to amend the tax law to allow deferral of capital gains tax if the proceeds of the sale are reinvested.

Answer 6

Yes. You must pay taxes on the gain regardless of what you do with the money whether it's four months, four days or even four seconds.

Answer 7

Yes. You get no deferral for reinvestment of the proceeds.

Answer 8

Yes.