47

Buying another asset makes no difference, you still owe capital gains tax on the sale. What cash should you use? If you didn't have other cash to pay the taxes you should have kept some of the cash from the sale to pay taxes and not reinvested it all.


41

At the time of the sale, you can designate what shares you want sold. The IRS requires that your broker verifies that those specific shares were sold. The IRS calls this "specific share identification." Without that confirmation, the IRS will default to FIFO (First In, First Out).


32

I had been pondering this recently myself too. This question motivated me to do a little research. It appears that what happens is that (take a deep breath) the capital gain does push you into the next tax bracket, but the capital gain is always interpreted as the "last" income you received, so that if your non-capital-gains income is less than ...


24

It seems to me you are thinking of the 1031 Exchange which offers deferral of the gain if the proceeds are all invested in the next property. This is for (rental) real estate, not stocks. A similar rule applied to one's home, but that law is long gone, and instead there is an exemption under certain conditions.


21

You didn't mention what the asset was. For non sheltered securities, their sale is a tax event whether it's a realized gain or loss regardless of what the holding period was or what you subsequently did with the money. If the asset was say a property, the tax status would depend on the amount of the gain and whether it was your home or an investment property....


20

You cannot get "your investment" out and "leave only the capital gains" until they become taxable at the long-term rate. When you sell some shares after holding them for less than a year, you have capital gains on which you will have to pay taxes at the short-term capital gains rate (that is, at the same rate as ordinary income). As an example, if you ...


17

Short Answer: You're going to end up paying taxes on it. Despite the home being your primary residence, you don't meet the ownership test, and it isn't noted that you have had a change in employment, health, or other unforeseen circumstances that are "forcing" you to sell. Otherwise, you could qualify for a reduced maximum exclusion that might allow you to ...


17

Assuming your investments aren't in any kind of tax-advantaged account (like an IRA), they are generally not tracked and you indeed may pay more taxes. What will likely change, however, is your cost basis. You only pay tax on the difference between the value of the investment when you sell it and its value when you bought it. There is no rule that says ...


15

There are two scenarios to determine the relevant date, and then a couple of options to determine the relevant price. Relevant Date If the stocks were purchased in your name from the start - then the relevant date is the date of the purchase. If the stocks were willed to you (i.e.: you inherited them), then the relevant date is the date at which the person ...


15

Although an ETF trades like a stock, it is really a stock mutual fund. And like all mutual funds, when you invest there are two ways that you realize a capital gain. As you mentioned, you have a capital gain when you sell a stock for more than you purchase it for, so when you finally sell this ETF, you will have a capital gain if the value of the ETF has ...


13

This image is an advertisement from a recent Barron's. The broker would want to put himself in the best light, correct? This shows you that of their current accounts, 53.5% are not profitable. And, keep in mind, these guys have the best track record of the list. Also, their client base isn't random. The winners tend to stay, so even if it were 50/50, the 50%...


13

If your total tax withholding (from your paychecks; not including estimated taxes) reaches 90% of your tax liability for this year, or 100% (110% for high earners) of your tax liability for last year, you do not have to pay estimated taxes and you will not have an underpayment penalty. (This is for federal tax; the rules for state underpayment penalties may ...


12

This is what sovereign wealth funds do. How the wealth is shared becomes a political question, for example: Alaska Permanent Fund eliminate state tax and give an annual dividend to residents Temasek Holdings advance industrial and diplomatic policy of Singapore. Now less so, but in the beginning, industrial policy = jobs. Government Pension Fund of ...


10

I'm wondering, why not invest all together in the stock market with a single account? Mutual funds already enable individuals to interact with the market collectively, so many people are already essentially doing what you propose. We would all be rich. Well, those that have significant excess funds after paying for essentials can earn a decent return. ...


9

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'...


9

The answer to this question requires looking at the mathematics of the Qualified Dividends and Capital Gains Worksheet (QDCGW). Start with Taxable Income which is the number that appears on Line 43 of Form 1040. This is after the Adjusted Gross Income has been reduced by the Standard Deduction or Itemized Deductions as the case may be, as well as the ...


9

The reinvestment of dividends and capital gains is a very significant portion of investment gains over the years. This creates a compounding effect on your gains. You should almost certainly reinvest to help the account grow, until you are retired and want to withdraw some cash. Placing them in a money market account just builds a pile of uninvested cash.


9

My question is... how is this new value determined? Does it go off of the tax appraised value? The tax assessors values are based on broad averages and are not very useful in determining actual home value. The most defensible valuation outside of a sale is a professional appraisal, real-estate agents may or may not give you reasonable estimates, but ...


9

This is explained at https://www.gov.uk/capital-gains-tax/rates There's no cliff-edge where your entire capital gain suddenly changes tax rate because you changed your income tax band. If on the basis of your income, you're a basic rate taxpayer, then you pay 10% CGT on any capital gains between your income and the top of the basic rate tax band. Then you ...


8

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.


8

In the US you specify explicitly what stocks you're selling. Brokers now are required to keep track of cost basis and report it to the IRS on the 1099-B, so you have to tell the broker which position it is that you're closing. Usually, the default is FIFO (i.e.: when you sell, you're assumed to be closing the oldest position), but you can change it if you ...


8

You only report the bottom line on your form 1040 (it goes to line 13/14). All the calculations are done on Schedule D/Form 4797. So the order doesn't matter, and it is "above the line" - the net result (i.e.: gains reduced by the losses) is calculated into the AGI. Remember that losses can only be deducted up to a certain limit, above which you'll have to ...


8

Please Note: Before taking any steps towards a transaction involving possible capital gains tax exclusions, please consult your CPA, attorney or tax advisor. I am not a CPA or Tax Advisor. Since you have only lived in it 11 months, you don't meet the "use test" for full exclusion. However, even if you haven't lived in it that long, you may be able to ...


8

Massachusets does no such thing. The 5.25% tax is only on realized gains. "Unearned" means "doesn't tie to your trade/business", i.e.: is not gained through your personal performance.


8

On line 3 of the QDCGT worksheet, as you say, you enter the smaller of your long-term gains and total gains. Assuming you did not have a loss in either category, your long-term gains will be less than both long- and short-term combined, so you will enter long-term gains here. On line 7 of this worksheet, you effectively subtract your long-term gains from ...


8

It's worse than that. You'll be charged US tax on all of your income, capital gains and other. Depending on where you are living, the tax you pay in that other country may (or may not) be used to offset the tax you have to pay on your US tax return.


7

401Ks and IRAs are types of retirement accounts. They have rules regarding maximum amount of investments per year; who can invest; destructibility; and the tax treatment of the growth. Stock, bonds, mutual funds, ETFs are all types of investments that can exist either inside or outside of the retirement account. Some 401Ks restrict the type of investments ...


7

Generally it is advisable to mention what country you're asking about, as tax laws differ. To the best of my knowledge, however, this particular issue is handled consistently in every tax jurisdiction I'm familiar with. You invested X, it appreciated and is now worth X + Y. In your example, X = $10,000 and Y = $40,000. Total X + Y = $50,000. When you ...


7

How much Federal Capital Gains, NYS Income tax and local tax should I expect to pay? You're going to net about 2.4 millions of dollars. Federal long term capital gains tax is 20% (plus 3.8% medicare), NYS is 8.82%. Does it make sense to investigate the tax benefits of financing the sale for the buyer? Yes. Have your tax adviser check the options for you ...


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