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Author: JeffGreenberg One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121219  
Subject: Short term selling within long term holding Date: 2/12/2002 4:39 PM
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Help me understand the tax consequences of short term selling on anticipated dips within long term holding:

Example One:
Person A buys $100,000 worth of multiple DJIA stocks and holds it for 2 years and sells it all for $200,000

Person B buys $100,000 worth of multiple DJIA stocks and holds it for 2 years and sells it all for $200,000 except that at the 6 month point Person B sold all the DJIA stocks for $125,000 and 7 days later bought all the same stocks back at all the same prices totalling $125,000

Person C buys $100,000 worth of multiple DJIA stocks and holds it for 2 years and sells it all for $200,000 except that at the 6 month point Person B sold all the DJIA stocks for $125,000 and 7 days later bought all the same stocks back for $100,000

Q: Do A & B have a capital gains of $100,000 at the same tax rate at the end of two years? Does C have a capital gains of $125,000 at the same tax rate as A & B? If the 7 day periods had been 32 day periods would the tax rates for B & C change?

Any further enlightenment or references appreciated. I am currently Person A but am considering becoming Person C at times. Regards.
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