Tax questions about selling stock/mutual funds
 

If I buy 100 shares of stock A in Janurary 2007 at 5 dollars a share and buy another 100 shares of the same stock in July 2007 at 3 dollars a share and then sell 100 shares of the stock a year later at 10 dollars a share how would i be taxed on it?

Also
I know you can sell stock/funds at a loss for tax purposes as long as you dont buy the same stock/fund within a month of selling it. Should you automatically do that at the end of the year if your stock is down for tax purposes?

Re: Tax questions about selling stock/mutual funds
 

[ QUOTE ]
If I buy 100 shares of stock A in Janurary 2007 at 5 dollars a share and buy another 100 shares of the same stock in July 2007 at 3 dollars a share and then sell 100 shares of the stock a year later at 10 dollars a share how would i be taxed on it?

Also
I know you can sell stock/funds at a loss for tax purposes as long as you dont buy the same stock/fund within a month of selling it. Should you automatically do that at the end of the year if your stock is down for tax purposes?

[/ QUOTE ]

You are allowed to specifically identify the stock you are selling. So, when you sell the 100 shares, you can opt to sell the 100 that were purchased for $5 so that you will have less capital gain.

You should sell your stock based on your investment strategy/plan. You should never sell when it's low just "for tax purposes." You should sell when you believe the stock will decline, or when you decide it doesn't fit your investment portfolio anymore. IMO.

Re: Tax questions about selling stock/mutual funds
 

well im just getting into investing but if i sold a stock that was up 25k and on decmeber 31st a different one that was down 25k wouldnt it make sense to sell if i figured i would be in a much higher tax bracket that year than any year in the forseeable future?

Re: Tax questions about selling stock/mutual funds
 

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well im just getting into investing but if i sold a stock that was up 25k and on decmeber 31st a different one that was down 25k wouldnt it make sense to sell if i figured i would be in a much higher tax bracket that year than any year in the forseeable future?

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From a tax perspective, yes, it makes sense to take a big capital loss in a year that you have a big capital gain IF you intend on selling it anyway. Again, don't let the tax implications completely drive your investment decisions. It's a factor, but certainly not the only one.

Re: Tax questions about selling stock/mutual funds
 

[ QUOTE ]
[ QUOTE ]
If I buy 100 shares of stock A in Janurary 2007 at 5 dollars a share and buy another 100 shares of the same stock in July 2007 at 3 dollars a share and then sell 100 shares of the stock a year later at 10 dollars a share how would i be taxed on it?

Also
I know you can sell stock/funds at a loss for tax purposes as long as you dont buy the same stock/fund within a month of selling it. Should you automatically do that at the end of the year if your stock is down for tax purposes?

[/ QUOTE ]

You are allowed to specifically identify the stock you are selling. So, when you sell the 100 shares, you can opt to sell the 100 that were purchased for $5 so that you will have less capital gain.

You should sell your stock based on your investment strategy/plan. You should never sell when it's low just "for tax purposes." You should sell when you believe the stock will decline, or when you decide it doesn't fit your investment portfolio anymore. IMO.

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I bought 1000 shares at $10. It is now $20

I think a stock is going to decline 10% in 2 months.

In 2 months the stock goes from short term to long term capital gains.

I am in a 30%+ tax bracket

I can wait, sell at $18, make $8000 and owe 15% = $1,200

Or sell now, make $10000 and pay 30% = $3,000 in taxes


so yeah, if you are in a high or low tax bracket, you definitely need to consider this when you are managing your investments.

edit: lol, in my example its actually better to sell, but you just have to work the numbers to see when it is better to sell or hold based on your calculations and predictions.