<<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 TaxesRoy
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