Is this correct? -- For the 1998 tax year, one will pay 20% on any holding sold during the 1998 calendar year which was bought 12 months and a day prior to the sale date.Also, how does a wash sale affect capital gains (vs. capital losses)?Thanks for any help here.Randy
toozie said:Also, how does a wash sale affect capital gains (vs. capital losses)?The wash sale rules apply only to capital losses, not to capital gains. If you sell for a gain, you have to report it and pay the taxes regardless of any other buys.Bob
Thanks. Do you know if I have the LT capital gains holding period / tax (12 months --> 20%) correct?Randy
[[For the 1998 tax year, one will pay 20% on any holding sold during the 1998 calendar year which was bought 12 months and a day prior to the sale date.]]Randy...The percentage gain rate that you'll pay on long term capital gains (assets held for more than one year and sold on or after 1-1-98) will depend upon your normal, marginal tax rate. If your normal rate is 28% or greater, your maximum tax on your long term capital gains would be 20%. But if your marginal tax bracket is 15%, then your tax rate for long term capital gains would be 10%. So it would certainly be safe to say that, for federal purposes, the maximum tax that you would pay on your qualified long term capital gains would be 20%.[[ Also, how does a wash sale affect capital gains (vs. capital losses)?]]The wash sale rules only apply to stocks sold for a loss (as Bob pointed out). If the stock is sold for a gain, then you'll be obligated to pay taxes on that gain, regardless if your turn around and repurchase that stock (or even another stock) immediately before or after the "gain" sale.We discuss both of these items in various posts in the Taxes FAQ area (archives section). You might want to drift over there and read more. In addition, both of these items are discussed in great detail in The Motley Fool Investment Tax Guide.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. There is still time available to do that tax planning (and tax saving) before the end of the year. 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. Pay special attention to the "archives" section. 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.
Thanks, TMF Taxes!Randy
toozie said: Do you know if I have the LT capital gains holding period / tax (12 months --> 20%) correct?It is 12 months + 1 day. If you buy 3/1/97 and sell 3/1/98 it is a short term gain. If, instead, you sell 3/2/98 it is a long term gain.Bob
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