Capital Gains Tax Guide
Incentive Stock Options
Incentive stock options enjoy favorable tax treatment compared to other forms of employee compensation. Income from incentive stock options is taxable for federal income tax (including the alternative minimum tax), but are not taxable for Social Security and Medicare taxes. Upon meeting all the criteria for a qualifying sale, income from...
Reporting Capital Gains and Losses on Schedule D and Form 8949
Starting in 2011, American taxpayers will use new Form 8949 along with Schedule D to report income from the sale of stock, bonds, mutual funds and other investments. Form 8949 will detail various transactions, with summary totals transferred to Schedule D.
Employee Stock Purchase Plans
Shares of company stock purchased through an Employee Stock Purchase Plan (ESPP) is subject to different tax treatment compared to other investments. Part of the gain is taxable as compensation income and subject to the ordinary tax rates. The remainder of the gain is treated as capital gain, which can be taxed at the lower long term capital gains rate. How much of the gain is taxed as compensation depends on how long you hold the shares.
Selling Gift Property
People often end up owning real estate and other property when the original owner has given that property to them. Transfers of property given before the original owner dies is called a gift. Recipients of gift property have different tax consequences than recipients of inherited property.
Modified Home Sale Exclusion for Non-Qualifying Use
When homeowners sell their main home, they can exclude up to $500,000 in capital gains from income tax. The Housing Assistance Tax Act of 2008 changes the rules. The amount of profits from the sale of a house that can be excluded is now based on the percentage of time when the house was used as a primary residence.
Foreclosures are treated as the sale of property for tax purposes. Homeowners going through a foreclosure will need to calculate their gain or loss for tax purposes, as well as consider any tax that might be due on the forgiveness or cancellation of debt.
When taxpayers sell an asset that has been depreciated for tax purposes, that sale may trigger a type of capital gain called depreciation recapture. The depreciation recapture tax mostly impacts landlords who are selling rental property. Learn more about the depreciation recapture tax.
Essential Tax Tips for Capital Gains & Losses
A capital gains is a type of income derived from buying and selling capital assets. The difference between what you paid for an investment and what you received when you sold that investment is a capital gain or loss.
Capital Gains Worksheet
Use financial software or spreadsheets to track all your investment information in one place. This will save you time and frustration at tax time. Here's some tips for keeping on top of your capital gains information.
Selling Your Home: Capital Gains Tax on the Sale of a Main Home
How to calculate capital gains taxes on the sale of a main home. Plus tips for lowering your capital gains using the Section 121 capital gains exclusion when selling your principal residence.
Capital Gains and Mutual Funds: Calculating Capital Gains on Shares
Calculating capital gain or loss when selling shares of a mutual fund can be complicated. Essential information about capital gains distributions, calculating mutual fund cost basis, and figuring capital gains or losses.
Wash Sale Rule on Capital Losses
If you buy the same stock within one month of selling that stock for a loss, your loss will be disallowed under the Wash Sale Rule. The loss is not gone forever, the disallowed is added to your cost basis in the new stock position.
Adjusted Basis Definition
Definition of "Adjusted Basis": the net cost of an asset after adjusting for various tax-related items.
Cost Basis Definition
Definition of "Cost Basis": the original price of an asset, such as stocks, bonds, mutual funds, property, or equipment. Cost basis includes the purchase price and any associated purchase costs.
Sample Mutual Fund Cost Basis Spreadsheet
Sample spreadsheet for keeping track of actual cost basis in a mutual fund using the specific identification method of accounting.
Wash Sale Rule
A wash sale is selling an investment at a loss and repurchasing the same (or very similar) investment within a short period of time (30 days before to 30 days after selling at a loss). Wash sales result in a deferral of the loss for tax reporting purposes. Wash sales can be avoided through careful investment planning.
Mutual Funds and Capital Gains
Investors have several methods for calculating cost basis on mutual fund shares. This in turn will impact how capital gains are calculated when selling shares. Essential information about capital gains distributions, calculating mutual fund cost basis, and figuring capital gains or losses.