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Author: SBT1 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121100  
Subject: Re: Stocks & Taxes - Misc. questions Date: 5/17/2001 3:52 PM
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<<<Is Buying a stock a "non-event?" I am getting together stuff for my accountant, and I would think he is only interested in the stock sales, and amount of profit or loss? If I bought a stock in 2000, and have not sold it yet, do I need to list that for him at all? Or should I just wait until the year the stock is sold in? And give him that information then?>>>

You should probably provide your accountant with a list of all stocks held at the end of the year along with their cost basis. This will make record keeping alot easier(for yourself and your accountant), and when you do eventually sell the stock you do not have to go back and figure out the cost basis. On the other hand, if you don't want to then its no big deal.

<<<Also, for my accountant, do I need to list transaction fees separately? If I bought a stock and Datek charged me $9.99 -- is that a separate event? Or can I just put it in with the cost of the shares. (Datek includes this $9.99 in with the amount of the stock -- If I buy a stock that is $100, and buy 10 shares, for $1000, on my Datek statements the amount is $1009.99) On the actual tax forms that go to the IRS, are these fees listed separately? Does my accountant need these separately? (Also, I have this same question when selling a stock and the fees.)>>>

No. All transaction fees (purchase and sale) should be added to the cost basis of the stock that those trasaction fees were charged in figuring gain/(loss) on schedule D. However, in calculating your gain/(loss) the fee to purchase a stock is usually added to the purchase price of the stock to figure your cost basis ($1,009.99) and the fee to sell a stock is usually deducted from the gross proceeds.

<<<Terms for owning stocks and tax percentages? I believe that stocks are divided into 2 categories -- long term and short term? With long term being anything over 12 months, and short term being less than a year? Is this correct? And there are different tax rates for these? So, I should separate out these for the accountant? Are losses treated with different percentages depending on how long the stocks were held?>>>

Yes. Yes there are different tax rates. Stocks held long term are subject to capital gains tax rates (lower than ordinary tax rates) while stocks held short term are subject to you oridinary tax rate. Your accountant will most likely punch the information you provide him into a computer program which will automatically seperate them into long term and short term so why spend the time doing it yourself. Besides, thats why you pay him the big bucks right?

Short term gains are netted against short term losses. Long term gains are netted against long term losses. The remaining long term gain/(loss) is then netted against the remaining short term gain/(loss). If the result is a net capital loss then that amount is deductible against ordinary income up to $3,000 per year. Any excess is carried over to future years.
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