The Capital Gains Blog

Archive for the ‘Capital Gains Rules’ Category

Question: Another stock trade tax question…this is my first year as a trader.?

If I made $10K buying and selling stock XYZ — and then lost $4K and $5K trading stock ABC within a day of each other — what is my trading income?

Is it still $10K in capital gains because the “white wash” rule basically eliminates all of the ABC trading losses?

I’m a little confused.

Many thanks again in advance!

Answer: The wash-sale rule applies to losses, not gain, and it’s only for the same company. So, if you made 10K profit on XYZ, and then lost $9k on ABC, your net trading income would be 1K.

In your example, if you sold your shares of ABC at a loss of $4k, and then bought the shares back the next day, you wouldn’t be able to claim the loss, but since you sold the purchased shares the next day as well, the wash rules don’t affect you.

For future reference:

The wash sale rule actually has three consequences:

You are not allowed to claim the loss on your sale.
Your disallowed loss is added to the basis of the replacement stock.
Your holding period for the replacement stock includes the holding period of the stock you sold.

I hope that helps.

Independent Financial Professionals Suggest How Investors and Their Advisors Can Adjust to a New Tax Landscape

Expiring tax provisions, or “sunsets,” have long been a feature of Uncle Sam’s tax code, but they usually involve relatively minor provisions. The Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003 depart dramatically from this pattern.

Question: Capital Gains Taxes – Options?

Are their different tax rules on capital gains of options vs. actual stock?

Answer: There’s a chart in IRS publication 550 to walk you through reporting it.

Australia Lawmakers Approve Tighter Foreign Takeover Rules

Australia Lawmakers Approve Tighter Foreign Takeover Rules

Question: If I sell a limited right to license my software to a 3rd party, is it a capital gain for tax purposes?

I hold the IP of a software program. A company has sold a license to use it to a 3rd party and has paid me for the right to sell it to them. Can it be considered as capital gains, so I can take advantage of the tax-free Capital Gains Allowance? (UK law preferably, though any answers may be relevant)

Answer: This could be quite a complex issue. The answer may be different it you owned the IP personally or if it isowned by a limited company. This is because IP is “intangible” property. There are different rules for the taxation of intangible property acquired by companies after 2002.

If you owned it as an individual then I think the position is much more straightforward.

You are licencing the IP for profit. That means the proceeds will be considered as income and taxed accordingly.

It would only be “capital” if you acquired the IP without any intention to trade it or sell it on. Then if you later disposed of it any gain is a Capital Gain.

(AFX UK Focus) 2010-02-02 09:53 China stocks erase gains on new share supply;HK up

By Jun Ebias and Claire Zhang

Question: why do I have to pay Capital Gains Tax on all gains with a mutual fund while losses are limited by each year?

Answer: That’s the law, plain and simple

Conservatism Leads to Higher Share Prices

High-quality earnings are the product of conservative accounting practices that provide a clear and reliable picture of the company’s financial status…

The Day Trading Robot – How To Make Money With Automated Stock

Question: I don’t understand Capital Gains – HELP!?

2009 was my first year preparing taxes and I did well – My employer has promoted me to processing for the upcoming tax year. Capital Gains and Depreciation are my weak areas – and I’ve tried rereading and study guides, but I am not grasping it. I need to know my stuff – HELP! Can anyone help me understand Capital Gains and Depreciation?

Answer: capital gains result is when you have some kind of asset, stocks,bonds, property etc. that you purchased at a specific price
then you down the line sell it, and make money on the deal
what you make is capital gains and has a special treatment taxwise because it probably was held for a period of time(Short Term Gains are a year and less)
Depreciation is the wear and tear to reduce the value of an asset at a regular rate, there are several methods and ‘life years’

(AFX UK Focus) 2010-01-06 17:15 Glance-FTSE up 0.1 pct; firm miners counter weak oils

By Jon Hopkins

Old colonial sores that modern China must heal 2009 07 06 CCTV 乌鲁木齐市 china today