If I buy 10 shares of stock at $10 each I have spent $100 in stocks.

If I later sell these within the same year, do I pay taxes only on the difference of the buy price and the sell price [with a deduction for loss] or the entire amount?

If I buy $100 worth of stock, and then sell it later in the year at $110, do I pay capital gains of 15% on $10? Or do I pay 15% on the $110? (I make under $100k a year)


2 Answers 2


You normally only pay taxes on the difference between the sale price and the cost basis of the asset. In your example, you would probably pay taxes on the $10 difference, not the full sale price of $110. If you paid a commission, however, you would be taxed on your gain minus the commission you paid. Since you held the asset for less than a year, you wouldn't pay the long-term capital gains rate of 20%; you'd be taxed on the capital gain as if it were ordinary income, which depends on your federal income tax bracket.

Also, littleadv makes a good point about the implications of buying the asset with after-tax funds too, so that's another part of the equation to consider as well.

  • 3
    Though the commissions on the trade do affect the basis possibly. Instead of being taxed on all $100 in gains, it is that minus the commissions for the transactions.
    – JB King
    Jul 2, 2013 at 19:47

Assuming you bought the stocks with after-tax money, you only pay tax on the difference. Had you bought he shares in a pretax retirement account, such as an IRA or 401(k), the taxation waits until you withdraw, at which point, it's all taxed as ordinary income.

  • I added a line to continue your thought, you are welcome to re-edit to add or clarify as you wish. Jul 2, 2013 at 19:47
  • 1
    NP. It looked like you were going there, and got interrupted. Jul 2, 2013 at 19:55
  • 2
    As a minor clarification and emendation, if the stocks were bought and sold in a Roth IRA account, then they were purchased with after-tax money and the capital gains stay in the Roth IRA account and are not taxed when they are ultimately withdrawn, unless the withdrawal is premature and does not meet any of the exceptions that exempt premature withdrawals from tax. Jul 27, 2013 at 23:03

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .