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
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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