Capital gains and losses: The difference between short-term and long-term capital gains

Yes. Proceeds related to short sales of securities are reported on a trade-date basis in the current year the trade is executed and not the year the sale is covered. Short sales of options are not reported. Rules that apply to short sales are complex. Refer to…

Assets held for investment purposes, including as stocks, options and bonds, are classified by the IRS as capital assets. When such assets are sold, a capital gain or loss is realized on the sale. If the capital asset is sold for a price greater than its purchase price, then a capital gain has been realized; if less, then a capital loss has been realized. In determining whether a capital gain or loss has been realized, adjustments to the purchase and sales price may be allowed to recognize certain transaction costs such as commissions and other specific adjustments…

In the case of a closing stock sale for U.S. taxpayers, the reporting date for Form 1099-B purposes is the trade date. Accordingly, a closing securities trade executed on the last date of the year will be reported on that year’s tax reporting despite the fact that it will settle in the following year…

Investments made within a mutual fund pay dividends and earn capital gains. Mutual funds declare dividends and capital gain distributions at certain times during the year. Dividend distributions (income distributions) are generally paid quarterly, capital gains distributions once a year usually at year end. These distributions are taxable. Unlike dividends from individual securities which are taxed in the year dividends are paid, mutual fund distributions declared as payable to shareholders of record in October, November or December and paid in January of the following year are taxable to shareholders based on the record date, not the payment date. Depending upon the time you purchase or sell a mutual fund you may receive a distribution of dividends and/or gains associated with those shares…