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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121588  
Subject: Re: Tax Scenario Date: 11/9/1999 12:52 AM
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<< Let's say you buy 100 shares of a company at 10 dollars. You pay 20.00 in commissions. >>

OK...your cost basis in these shares amounts to $1,020 (100 X $10/share = $1,000 plus your $20 commission)

<<But your shares appreciate
to 100.00. So you sell all of them and pay a commission of another 20.00. My question is this: What is your capital
gains?>>

Your gross sales price will be $10,000 (100 shares X $100/share). You'll then reduce your sales price by the amount of your commission ($20 in your example). So your net sales price would amount to $9,980.


Just a little side note since you said you're fairly new with investing. The statement you get from your broker will probably include the commission in the transaction, so you won't need to track it separately. In other words, when you buy the shares, your statement will probably say: Bought 100sh XYZ co. $1020 and Sold 100sh XYZ co. $9980. Make sure to check your first buy and sell to understand how your broker reports these on their statements.

--ptheland
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