Is the capital gains tax assessed when stocks are sold, or when my broker issues me a check?
March 24, 2009
asdaltid asked:
If I buy $1500 worth of stock and sell it when the value is $2000, is the tax assessed at the point of sale? In other words, can I avoid the tax by leaving the proceeds in my broker account?
If I buy $1500 worth of stock and sell it when the value is $2000, is the tax assessed at the point of sale? In other words, can I avoid the tax by leaving the proceeds in my broker account?
7 Responses to “Is the capital gains tax assessed when stocks are sold, or when my broker issues me a check?”
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March 27th, 2009 at 9:56 pm
You claim the capital gains in the year they are sold. It does not matter if you take a check or leave it in your account.
Christine EA Master Tax Advisor
This advice was prepared based on our understanding of the tax law in effect at the time it was written as it applies to the facts that you provided.
March 29th, 2009 at 11:40 pm
No, you cannot avoid the capital gain just because you leave the proceeds in your brokerage account. As soon as you sell, you trigger the capital gain.
March 30th, 2009 at 5:51 am
The other answer is correct. For clarification, it is the sell date and not the settlement date. Most investors have a street account and never have the funds sent directly to their home.
March 30th, 2009 at 8:57 am
The technical answer is that the tax is assessed when you file.
The real answer to your question is that capital gain occurs when the sale occurs; you must report it on your tax return for the year of the sale and must pay the tax by the due date of that return, even if the proceeds are still in the broker account.
This applies even if the broker never issues a check. For example, if you instruct your broker to use the proceeds to buy other stock, which then declines in value to zero, you must still pay the tax by the due date for the year when you sold the original stock, even though you never receive any money. (However, when the now stock becomes worthless, you can deduct what you paid for it.)
March 31st, 2009 at 2:42 am
And it is the day you actually make the sell trade. So for example if you sold a stock 12/30/08 you have to include it on your 2008 Schedule D, even though it did not settle until 2009.
April 2nd, 2009 at 8:33 am
When you file your tax return for the year in which stock was sold
you receive a 1099B which you use in preparing tax return
Capital gains are BARELY taxed under Bush and Republicans, 0-15% tax rate on gains
April 3rd, 2009 at 3:47 am
when stocks are sold.