Do I have to pay tax if i lose money from the sale of a stock?

Question

Do I have to pay capital gains on the profit or the whole sale of an security? For example: Say I bought $1,000 worth of a stock and sold it for $750 for a loss of $250. Would I pay tax on the $750 or pay no capital gain tax at all?

Answer 1

You have no capital gain and thus no capital gain tax

You have a capital loss which can offset other capital gains

Short-term to short term and long term to long term capital gain/loss offset

And don't forget the expenses of sale and purchase

Answer 2

You can deduct up to $3,000 a year in stock losses.

($250 + cost of the transactions)

Hopefully this  is a hypothetical question. Otherwise you're talking about a 25% loss.

Be careful.  Don't make typical newbie mistakes, such as;

Buying penny stocks (stocks under $5.00).

Taking "tips" from friends, radio, TV, relatives etc.

Had a "hunch" or a "feeling".

Thought the stock was "so low"..... how much further could it go down.

Playing with volitile stocks like Apple & Rimm.

You should always have a specific exit plan before you buy a stock. Position size always & don't deviate from your "asset allocation" model.