The Capital Gains Blog

Archive for the ‘Capital Gains Rules’ Category

Question: Does a person have to pay Short Term Capital Gains Tax on securities even if income is within exemption limit?

Answer: If your income including short term capital gains are below taxable (exemption limit), then you need not pay any tax. If your income including short term capital gains exceeds the exemption limit, then you have to pay @10% for the excess amount.

Example:- Say your exemption limit is Rs.1 lakh. Your income without short term capital gains are Rs.90,000; Your short term capital gains are Rs.10,000/-; In this case the total income including capital gains are within the exemption limit. In case if your short term capital gains are Rs.15,000, then you have to pay tax on the excess amount Rs.5000 @10%. (Plus education cess @2% on tax)

Tax Tip: 10 facts about Capital Gains And Losses

Have you heard of capital gains and losses? If not, you may want to read up on them because they might have an impact on your tax return.

Poker After Dark Season 6 Episode 7 part 3/7 [s06e07]

Question: Do you need to pay tax on capital gains if you reinvest immediately? (Canadian tax laws apply)?

I bought RY and hold for 9 months, sold in November 06, then reinvest all the proceeds into TD. My cap gain was roughly $5,000. Do I have to pay tax on that?

Answer: Yes you do.

YOu must claim the $5000 as a capital gain, regardless of the fact that you reinvested it. Complete Schedule 3 on your tax return and be sure to deduct any commissions that you paid your broker.

The taxable portion of this gain will only be $2,500.

Ark. GOP gubernatorial candidate Keet calls for cuts in capital gains, income taxes

LITTLE ROCK, Ark. – Republican gubernatorial candidate Jim Keet on Tuesday called for phasing out the state’s tax on capital gains and a reduction in Arkansas’ income tax.

Question: IRS Interest?

If I owe the IRS 4000 dollars in capital gains, because they ruled against me. If they waited three years to aduit me, how much would the added interest be?

Answer: About $800 for three years.

Capital High Students Brings Technology to Fingertips

I-CHS is now available for download in the iTunes Application Store.

Question: Frictions costs vs capital gains. Have the rules changed?

Hi all,

I’m a complete Noob to stock trading.

Bought my first stock, $50K of BCS at $5.30 3 weeks ago planning on a 1 year buy and hold strategy hoping for a 10-20% return.
It’s now $16.48 giving 270% in 3 weeks.

All the advice I’ve read says buy and hold gives better returns due to less frictional costs and lower Capital Gains Tax after a year.

How can I calculate the merits of selling quickly or holding for a year? I was looking for 10-20% return per year so seeing such a large change has made me wonder if the rules have changed and I should sell to lock in the profit?

Thanks,

Answer: Under normal circumstances you want do not want to have too many trades because you want to decrease friction costs.

Under normal circumstances you want to hold profitable positions for at least a year to take advantage of long-term Capital Gains Rates.

Those are still as true today as they were three weeks ago, three years ago, or three decades ago.

Getting a 270% return on a stock purchase in three weeks is not a normal circumstance. You will rarely, if ever, repeat that kind of performance on a stock purchase.

Here are a couple other general rules you should know.

Never put too many eggs in one basket. You should diversify your investments so you can not lose too much if one goes bad.

Low priced stocks are usually high-risk investments which can make big gains or big losses quickly. Consequently they should only be a relatively small portion of any portfolio.

Unless you have a large portfolio (around $1,000,000 or more) in investments other than stock it appears you violated one or both of those general rules/guidelines. Fortunately the stock went up and you have a handsome profit.

I am not an investment professional, and I do not follow BCS stock, so my advice is based on general principles and my experience in the markets. I recommend you sell at least half of the stock. It is true it will give you a significant tax hit, but paying taxes on profits is always better than watching the profits disappear if the stock goes back down.

When you originally bought the stock you decided to risk $50,000 on the company. You now have over $180,000 in assets at risk on the same company. If you sold all but 3,000 shares that would reduce your risk back down to about $50,000 and give you cash to invest elsewhere. (You should file estimated taxes and give Uncle Sam part of that profit.)

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Deciding when to sell is at least as hard as deciding when to buy. Here is one trick I use. I look at the stock as if I did not already own it and decide if I would want to buy it at the current price. If the answer to that question is no, it is time to sell the stock. If I would still want to buy it, but I have too many dollars at risk because the stock has gone up, I sell part of my position.

<<<... wonder if the rules have changed and I should sell to lock in the profit?>>>

The rules (guidelines) have not changed, but you need more than the two rules (guidelines) you mentioned to make good choices.

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I want to pass on one other resource to you. There is an excellent “Guide to Capital Gains And Losses” at

http://www.fairmark.com/capgain/index.htm

which should clarify tax issues on stock investments if you have questions. The statement in another answer that “Your capital gains is going to be 15% either way.” is wrong. Long term rates on capital gains are lower than short term rates.

BlueGold’s Jen Says China May Revalue Yuan By 5% (Update2)

Feb. 18 (Bloomberg) — China may let its currency appreciate by 5 percent as early as next month to prevent economic growth from stoking inflation, according to Stephen Jen of BlueGold Capital Management LLP.

Capital gains, estate taxes change in R.I.

Two big changes in Rhode Island tax law are now in effect, and they’re worth keeping in mind.

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