If i understand this right i owe taxes the amount of money earned on a stock when sold, correct? My broker will then send me a 1099 form on this, correct? I've read about tax deferred accounts, would that defer taxes until i withdrawl from the account? How do they work?
[[If i understand this right i owe taxes the amount of money earned on a stock when sold, correct? My broker will then send me a 1099 form on this, correct?]]Your broker will send you a Form 1099B for the SELL end of the transaction only. You have the responsibility to determine your basis (or cost) in the stock for tax reporting purposes. And yes, you will only pay tax on the realized gain on the sale of a stock when it is actually sold. You don't pay taxes on "paper" gains.[[ I've read about tax deferred accounts, would that defer taxes until i withdrawl from the account? How do they work]]You can read more about IRA and Roth IRA accounts in the Taxes FAQ area. We also discuss these issues in the TMF Investment Tax Guide...you might want to check it out. You can also read more about tax deferred account in IRS Publications 590 and 560 at the IRS web site.TMF TaxesRoyWant to learn more about taxes and investing? Then we have a deal for you!! The Motley Fool Investment Tax Guide is now available through Fool Mart. Be the first one on your block to own this masterpiece. It'll help you with your 1998 taxes, and it's never to early to start planning for your 1999 taxes. So just click on this link (http://www.foolmart.com/market/product.asp?pfid=MF+013+I) to read more about this amazing collection of tax information. (Apologies for the shameless plug…but it is a pretty good book…if I do say so myself). In addition, if you would like to visit the Taxes FAQ (Frequently Asked Questions) area, click on http://www.fool.com/school/taxes/taxes.htm and you'll be right at the home page. Check it out. Finally, if you need to get to the IRS web site, click on http://www.irs.ustreas.gov to go directly there.
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