3

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?

|improve this question
  • 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
5

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. – JoeTaxpayer♦ 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... – JoeTaxpayer♦ 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) – JoeTaxpayer♦ Jan 5 '18 at 20:17

You must log in to answer this question.

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