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<<I am pretty new at buying stocks and have a scenario that I would like to share with you.>>

Congrats for getting off of the sidelines and gettin' into the game.

<< 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)

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.

From that amount you would subtract your original cost of the shares as computed above of \$1,020. Do the math and you'll find that you gain on the sale would amount to \$8,960.

<< Is it 9000 or does the irs allow you to deduct the commissions of 40.00 to buy and sell making your capital
gains 8960?>>

See...you got it right the very first time.

<< A thoughtful reply to an experienced investor would be appreciated thanxs.>>

Hope this helps. And as a newcomer to investing and taxes, you'll really benefit from reading my new book. It explains all of the very basic issues in a fun, entertaining, and educational method. Including examples. :-)

TMF Taxes
Roy

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