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When we sell or buy stocks, is the trading commission considered within Capital Gain/Loss? For example, if I were to buy 10 shares of ABC stocks at $10 + $12 Commission) and I decided it was a tanking company, so I sold 10 shares of ABC stocks at $10 + $12 Commission), can I write the $24 as a loss or based on IRS, it's irrelevant and I eat the Commission?
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When we sell or buy stocks, is the trading commission considered within Capital Gain/Loss? For example, if I were to buy 10 shares of ABC stocks at $10 + $12 Commission) and I decided it was a tanking company, so I sold 10 shares of ABC stocks at $10 + $12 Commission), can I write the $24 as a loss or based on IRS, it's irrelevant and I eat the Commission?

The $24 is a loss. If you held ABC for one year or less, it is a short-term capital loss (Sch D line 1). If one year and a day or more, it is a long-term capital loss (Sch D line 8).

Ira
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Allow me to explain Ira's post further for those who would like it (I hope you don't mind, Ira)--

The commission you pay on a stock trade (either a buy or sell) is added to the basis (buy) or subtracted from sale price (sell). Let me demonstrate with your example:

<u>Transaction 1</u>
Buy 10 shares of ABC at $10/share, pay $12 commission.
Total cost = $100 for stock + $12 for commission = $112.
Basis in stock = $112, or $11.20 per share

<u>Transaction 2</u>
Sell 10 shares of ABC purchased in Transaction 1 at $10/share, pay $12 commission
Total sale price = $100 for stock - $12 for commission = $88.
Sale price = $88, or $8.80 per share

<u>Calculation of Gain/Loss</u>
Sale price of $88 ($8.80 per share) - Basis of $112 ($11.20 per share) = LOSS of $24 ($2.40 per share).

Report, as IRA stated, on the appropriate line of Schedule D depending on the term held.

CPAScott
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Oops -- I guess the underline html tags don't work here!

CPAScott
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Scott,

Thanks. As soon as I hit the "submit reply" button I thought I should have explained everything in detail, but I didn't have the time to go back and do so.

Ira
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So is it right to say then that whatever capital gain/loss we receive when we buy and sell stocks, we can write that trading commission off?

Thanx,
Al

When we sell or buy stocks, is the trading commission considered within Capital Gain/Loss? For example, if I were to buy 10 shares of ABC stocks at $10 + $12 Commission) and I decided it was a tanking company, so I sold 10 shares of ABC stocks at $10 + $12 Commission), can I write the $24 as a loss or based on IRS, it's irrelevant and I eat the Commission?

The $24 is a loss. If you held ABC for one year or less, it is a short-term capital loss (Sch D line 1). If one year and a day or more, it is a long-term capital loss (Sch D line 8).

Ira
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As CPAScott more thoroughly explained,

You add the "buy" commission to the cost of the shares you purchase.

You subtract the "sell" commission from the gross proceeds of the shares you sell.

The difference between these two numbers is your capital gain (or loss). Your trading costs are part of the calculation.

Ira
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