Asking from US tax perspective,

  • I have a stock that I bought for $1.
  • I sell it at some point for $2.
  • Within a week or two after, the same stock falls to $1.3. At this point, I buy one stock again.

Is tax calculated on the basis of $0.7 (2 - 1.3, net extra money I ended up with) or $1 (the gain from the first lot)? Does time period between these events make any difference?

  • If you had bought both lots before the sale, you get to choose which shares are sold. If you don't want to do first-in first-out you need to inform your broker which shares to sell, assuming your purchases are recent enough that the broker tracks the basis for you. Also watch out for a wash sale. If you lost money on the first purchase and bought the same stock within 30 days you cannot deduct the loss. Feb 29 '20 at 16:46

You are taxed on realized gains. So you would be taxed on the $1 per share profit. The next time you sell, your cost basis would be $1.30.

Does time period between these events make any difference?

Only when determining if the capital gain is classified as short-term or long-term. If the sale is more than a year after the purchase, the gain is classified as long-term and taxed at a different rate.


You have a capital gain of $1. Your basis for the new share of stock is $1.30. Because you sold at a gain, there is no adjustment to the basis of the new share. If you had sold at a loss, it would have been added to the basis of the new share. The time period involved is 30 days before, and 30 days after, selling at a loss.

  • The situation when selling at a loss and purchasing within 30 days is called a "wash sale".
    – Barmar
    Feb 29 '20 at 17:40

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