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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 120780  
Subject: Re: Tax Scenario Date: 11/8/1999 11:29 PM
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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)

<<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.

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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