4

Say, for example, I bought 10 shares of stock XYZ on January 1, 2018 and I buy another 10 shares of the same stock on April 1, 2018. Then I wait until January 1, 2019 to sell all the shares of my XYZ stock. Would the long term capital gain tax affect only the first 10 shares I bought since I've only held those shares for 1 year? Or would it affect all 20 shares that I sold?

  • The proceeds on all the shares would be subject to capital gains tax; the difference is whether they would be taxed as short-term (at this time, at the same rate as personal income) or as long-term (at a lower tax rate) gains. – chepner Jan 5 '18 at 19:32
  • Related: money.stackexchange.com/questions/87042/… – BrenBarn Jan 6 '18 at 3:48
6

The long/short term distinction is made per lot. So you would pay long-term gains tax on the profit made from the first lot of 10 shares, and short-term capital gains tax on profit made from the second lot of 10 shares.

| improve this answer | |
  • 1
    And to be clear, the option for one to choose which lots to sell, for partial sales, is gone. It's first in first out, from here on in. – JTP - Apologise to Monica Jan 5 '18 at 19:34
  • 1
    The new code has a good number of delightful changes that will catch many by surprise. No more "roth recharacterization" is my favorite... – JTP - Apologise to Monica Jan 5 '18 at 19:36
  • 1
    @JoeTaxpayer Thought the FIFO rule was later removed? Did it come back in the final bill? Do you have a source? – xiaomy Jan 5 '18 at 19:37
  • 1
    @JoeTaxpayer See this article for example. FIFO was removed. – Joe Jan 5 '18 at 20:04
  • 1
    @Joe - I stand corrected. It was removed from the final bill. (A lot of other bad things remained, but forced FIFO was pulled out) – JTP - Apologise to Monica Jan 5 '18 at 20:17

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.