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Calculating Capital Gains
Calculating Capital Gains

Calculating Capital Gains - PowerPoint Presentation

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Calculating Capital Gains - Description

Taxes on the profitable sale of stocks Cost basis Before you can calculate how much capital gains tax you owe you must figure out your cost basis for the stock Cost basis Amount you paid for the stock plus any applicable commissions ID: 541798 Download Presentation

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Presentation on theme: "Calculating Capital Gains"— Presentation transcript

Slide1

Calculating Capital Gains

Taxes on the profitable sale of stocksSlide2

Cost basis

Before you can calculate how much capital gains tax you owe, you must figure out your cost basis for the stock

Cost basis: Amount you paid for the stock plus any applicable commissions

For example:

You buy 1000 shares of xyz stock for $20,000. You pay $1000 commission

Your cost basis for this investment is $21,000 or $21 per shareSlide3

Capital Gains Tax

You will be charged a tax on the sale of stocks if you profit

You will only pay taxes on the profit portion of your sale (Sale Amount – Cost basis)

You will pay a larger percentage of taxes if you’ve owned the stock for less than one year

This is known as short-term vs. long term capital gainsSlide4

capital

gains: Short Term vs. long term

While the actual percentages vary based on each individual investor’s income and tax situation, we will use these guidelines for our example:

Short term capital gains: taxes on profit from sale of stock owned

less than 1 year

Long term Capital gains: taxes from profit from sale of stock owned

more than 1 yearSlide5

capital gains: Short Term vs. long term

In

our example:

Investor sells his 1000 xyz shares for

a total of $34,000 ($34 per share)

after 4 months

$

34 Per Share

sale price - $

21 Per Share cost

basis =

$

13 profit Per share

Based on his personal

situation, this investor would be looking at the following capital gains tax rates:

Short-Term

Federal

28%

NY State 6.65

%

Long-Term Federal 15% NY State 6.65%

Find

the Amount owed in taxes to Federal and state Governments

Determine investor’s actual profit