Lets say I buy x number of company stock at 100 $ and the price fell to 50 $ after some time. I then buy some more stock 'y' of the same company to bring average price to 60 $. And finally sell all stock 'x+y' at 61$ a slight profit. How would the tax will work. Is it just 1 $ gain on all lot combined i.e $x+y Or is it 39x$ loss on first lot and 11y$ gain on second lot. If its second case do I have to worry about tax loss harvesting limit of 3k ? Edit : simplified version : If I have one lot of stock with 10k gain and another lot at 9k loss both from same company. Can I sell them together and just pay capital gain at 1k ? This is related to 3k limit of Tax loss harvesting.
It would be the gain/loss of each share. So, $39 loss and $11 gain. Overall you lost $28, which should be reflected as part of your taxation
You can #1 sell the x stocks at a loss or #2 sell y socks for profit or #3 sell x+y for loss or profit
So In case 3 , if i sell them together. I will have the cumalative gain. It wont matter if individuall loss was more than 3k in first lot? And i pay capital gain on profit on avg price
The $3k limit is only when you don't have any capital gains to apply the capital losses towards cancelling out, and you want to apply the capital loss to your normal income. You can cancel out any amount of capital gains as long as you have enough capital losses to balance them out. Keep in mind the priority rules for cancelling long- vs short- term gains though.
Depends on holding period and trading window.
@amazon’s comment makes no sense. Your sale of ‘5x’ (y=4x, just fyi) amount of stock will be assessed at a cost basis of $60 so you’ll be taxed on that +$1 per share. And even if these were separate trades, the tax liability would remain the same. The reason is because of wash sales so like, if you bought x at $100 and sold it at $61, net loss is $39 * x. If you then bought 4x at $50 and sold it at $61, the net profit on that trade of $11 * 4x would be what’s reported to the IRS. The $39 * x loss isn’t actually reported as a loss, rather, it’s included in the cost basis for your second trade.
Thanks. This is what I was looking for. Before buying more stock to reduce average price
Also, you should know that capital losses carry over from year to year. I mean, hopefully, you never run into that situation but you should know that you’ll never have to worry about exceeding that 3k limit and then having losses not be accounted for.
As Oracle said, 3k limit applies when you don’t have gains to offset it. In any case, you could carry your loss to subsequent years. E.g., 30k loss in one year could be applied to 3k per year for 10 years.
Also, Microsoft guy has a good point. You can’t claim loss on your tsla shares until 30 days after buying it. Caution: Buying tsla again would reset the 30 day waiting period.
Tech Industry
Yesterday
778
Do you really think Amazon is that bad
Software Engineering Career
4h
601
Amazon L5 to Google L4?
India
Yesterday
1358
Slavery has REVERSED! the US is the slave!!! Check out this dude who pays a personal trainer in India
Work Visa
Yesterday
5572
Last h1 attempt
Tech Industry
Yesterday
636
Best LCOL or MCOL city?
Total loss or gain = Sell Price - Buy Price, you calculate for each lot and you report the pay for the total loss or gain. And how did you get into Facebook?
My qtn is regarding tax loss harvesting. Didnt have any money to invest before I joined FB. And chose a bad time and company to invest
Loss or gain is on total Capital in a given tax year