I am a bit confused on this. I hope you folks can help me.
Here is a simple problem.
I buy 100 shares of Enron Stocks at 10 dollars a share with a commission of 20 dollars. That’s 1020.00.
I then sell 100 shares of Enron stocks 11 dollars a share with the same commission of 20 bucks. That’s 1080.00.
What am I going to get taxed on? Would it be 60 dollars or would it be 100 dollars or would it be 1100 dollars. Is commission a factor in figuring capital gains?
Thank You
Chubbs
I am not an accountant.
Capital gains taxes apply to profits, not to total bought and sold amounts. I don’t know the rules for commissions, but I’d keep copies of your receipts for possible deductions.
Btw, if you sell the shares within one year of buying them, you have to pay short-term CG taxes, which are higher than long-term CG taxes.
$60. The 60 dollars is your gain, and commisions do get figured into the calculations.
You don’t pay tax on the commissions, on either end.
According to the instructions for Schedule D, the sales price is the price less commission, and the cost basis is the amount paid less commission. So your gain would be $20.
Chava
Sorry, I misread the OP. The gain is $60, since you already included the commission correction in your numbers.
Chava
Chava, that is incorrect.
Sales price - commission = 1,080
Cost basis - commision = 1,020
Net gain is $60, not $20.
Perhaps this is merely semantics, but I do not believe it is correct to say that you do not pay tax on the commissions since they are part of the tax calculations. You do pay <negative> tax on them, since they are included in the taxable amount.
…and simul-posting claims another victim. Didn’t see your next post in time Chava.