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Chad CFP ®
Chad CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional
Category: Tax
Satisfied Customers: 469
Experience:  Managing Director at Caros Group
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Capital gains on sale of stock bought with 100% margin debt?

Customer Question

capital gains on sale of stock bought with 100% margin debt?
Submitted: 4 months ago.
Category: Tax
Expert:  Chad CFP ® replied 4 months ago.

Hello, My name is***** am a Certified Financial Planning ® Professional.

The Capitals gains will depend on your individual tax bracket and how long you held the stock for. Over or under a year period. How long did you hold the stock ?

Expert:  Chad CFP ® replied 4 months ago.

If you are trying to determine your cost basis, then you back out all associated costs such as interest, brokers fees and any other fees you paid for the margin loan.

Expert:  Chad CFP ® replied 4 months ago.

Once you know what your total cost (interest, brokerage fees, commission, etc) was to buy the stock with the margin loan, then you can subtract that cost from the final sale price.

Once you have the final sale price your tax rate is determined by your holding period. If you held the stock for less then a year, you would pay short term capital gains, 365 plus 1 and you would pay long term capital gains.

Long-Term Capital Gains -2017

For taxpayers in the 10% or 15% Federal tax bracket--0% LTCG

For taxpayers in 25%, 28%, 33%, 35% brackets--15% LTCG

For taxpayers in 39.6% bracket--20% LTCG

Tax on unrecaptured Sec. 1250 gain--25% LTCG

Capital gain rate on collectibles--28% LTCG