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Thus far almost all my stock trading has been done in IRA's, with essentially no tax implications.

I'm about to start trading in a taxable account, though, and wanted to try to understand a little better how ST and LT cap gains taxes work.

Let's say I have the following scenario:

I buy 100 shares of stock AAA on January 2.
I sell 40 shares of stock AAA on May 1.
I buy 40 shares of stock AAA on October 1.
I sell 100 shares of stock AAA on January 3 the following year.

The 40 shares I sell on May 1 and the 40 shares I buy on October 1 and then sell on January 3 will be taxed at ST gains rates, correct?

But the 60 shares that are held for a year and a day will be taxed at LT gains rates. Is this right?

TIA,

Todd
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The 40 shares I sell on May 1 and the 40 shares I buy on October 1 and then sell on January 3 will be taxed at ST gains rates, correct?

Correct. You may have the choice of which shares are sold but otherwise it is first in first out. If not held for at least 30 days the wash rule will apply to any loss.

But the 60 shares that are held for a year and a day will be taxed at LT gains rates. Is this right?

Yes

gdm
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