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Category: Tax
Satisfied Customers: 5883
Experience:  CPA with tax experience.
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I am new to the stock market and was wondering about the taxes.

Resolved Question:

I am new to the stock market and was wondering about the taxes. I do believe I am taxed on the gains that I make from selling the stock, Am I also taxed if I turn the gains liquid? How many times am I taxed on that gain?
Submitted: 6 years ago.
Category: Tax
Expert:  JKCPA replied 6 years ago.



Thanks for your question.


Any gains from selling stock are taxed at your ordinary income tax rates if you held the stock less than 1 year or at the long-term capital gains tax rates if you held the stock more than 1 year. Yes, any gains that are made liquid such as when selling stock and moving the money into a money market fund are taxable (unless they are held within an IRA account).


You are only taxed once on any gain. For example, you bought stock for $100 but sold it for $200. The $100 gain is taxable. You later invest your $200 proceeds into another stock. You sell this new stock for $250. You now have a $50 taxable gain to report. Your $100 grew to $250 but you've only been taxed on the $150 total gains.


Hope this helps,

Best regards,


Edited by JK_CPA on 5/3/2010 at 3:37 PM EST
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