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Author: YieldSigns Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: Trading and Taxes Date: 1/2/1999 11:48 AM
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I recently sold some AOL and AMZN for literally $10,000's of thousands of dollars of profit in just over 30 days. First, I foolishly (small "f") sold it last Tuesday. I realize I have a short term tax gain hit coming. Is the sale itself the taxable event (in which case I owe the taxes in April) or is it the T+3 funding date that triggers the taxable event, in which case I realize the gain in 1999 and get a year repreive.

Second, I owned 100 shares of AMZN for 30 days straight. So, naturally, I had a near double on a $20,000 "investment". I then sold 100 shares and bought back 100 shares on the same day (regretting the ill-conceived sale). Can I match the buy and sell orders of the same day (which amounts to a $300 gain) with each other and defer the gargantuan profits I have on the older holdings, or must I match the older holdings with the sale order?
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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: 7868 of 121061
Subject: Re: Trading and Taxes Date: 1/2/1999 3:22 PM
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[[ I recently sold some AOL and AMZN for literally $10,000's of thousands of
dollars of profit in just over 30 days. First, I foolishly (small "f") sold it last
Tuesday. I realize I have a short term tax gain hit coming.]]

Congrats on your gain. And...not trying to be critical...WHAT IN THE WORLD WERE YOU THINKING!!!! Just holding the shares for a few more days would have pushed your gain into 1999, and may have allowed you about 16 months to deal with the tax issues.

[[ Is the sale itself the
taxable event (in which case I owe the taxes in April) or is it the T+3 funding
date that triggers the taxable event, in which case I realize the gain in 1999 and
get a year repreive. ]]

The sale date controls. And if your gains are substantial, you may have to cut lose with the estimated tax payment cash on January 15th in order to avoid an underpayment penalty. You can read more about the estimated tax penalty issues in the Taxes FAQ area. Check it out.

[[ Second, I owned 100 shares of AMZN for 30 days straight. So, naturally, I had
a near double on a $20,000 "investment". I then sold 100 shares and bought
back 100 shares on the same day (regretting the ill-conceived sale). Can I match
the buy and sell orders of the same day (which amounts to a $300 gain) with
each other and defer the gargantuan profits I have on the older holdings, or must
I match the older holdings with the sale order?]]

If you make a sale for a gain, you pay the tax. There is no provision to "offset" your gain against a new purchase. You may be thinkin' about the wash sale rules, but the wash sale rules only apply to shares sold at a LOSS...not a profit.

So you've flogged yourself pretty good here. The only good news is that you'll have the money to pay the taxes.

TMF Taxes
Roy

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