Capital gains or regular tax? I bought stock in company at differnt times and sold some.?

Question

I have owned some stock for over 2 years. I recently sold 50 shares and one week later bought back 25. Now assume I sell 25 again. Is that taxed as capital gains because I could be selling some of the old stock or is do I owe regular taxes because it is assumed I am reselling my recently purchased stock?

Answer 1

You are selling the stock which cost the most first, aren't you ?

Answer 2

The law requires that if you do not specify which shares you are selling you sold the olderst shares first for tax purposes.

If you do not know how to specify which shares you are selling, here is a good reference on the subject:

http://www.fairmark.com/capgain/ident.ht...

That is part of a much larger guide on capital gains you can find at

http://www.fairmark.com/capgain/index.ht...

If you are going to sell and repurchase shares in the same company in less than a month I suggest you pay particular attention to the section on "wash sales" if you are not already familiar with them.

Answer 3

FIFO

Answer 4

Stock trades are capital gains.  I think you may mean short term or long term in stead of capital or regular.

Assuming all the shares are in the same account you use FIFO, first in first out.

I trust you understand my numbers do not include broker fees.

You buy 100 AAPL in July 2006 at $65

You sell 50 AAPL in May 2008 at $180

The profit is long term capital gain.

You buy back 25 AAPL on July 18, 2008 at $165

When you sell again the first 50 shares will be from the original 100 and considered long term.

You need to watch out for the wash sale rule.  You can find that in Pub. 550 from the IRS.

The short version is if you sell at a loss within 30days of a buy you trigger a wash sale.

Just another tax payer