Capital Gains Treatment

  

This is how Uncle Sam gonna tax that asset. One of the two flavors anyway. In this case, that asset is an equity and any profit made from selling it (i.e. "capital gain") will be taxed based on how long the investor held the stock. Less than a one-year holding period results in "short-term capital gains" and profits will be treated to a higher tax rate (up to 35% federal, plus more on the state level...based on the investor's tax bracket).

Selling a stock that was held for more than one year after the purchase date will result in a "long-term capital gains" tax (maximum of 20%, depending on tax bracket, plus more from the individual state). So while "buy and hold" is a sound investment strategy, "buy and hold for at least one year" is a better one, at least for tax purposes.

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receiving cash like oh I realize I have cash in my bank account yay me!

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so all this was so good such a nice day until you realize that you live in a [Woman frollocking in a meadow]

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the old-fashioned way you had 30 grand of profits and now uncle sam says i want [Uncle Sam demanding I want your cash]

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your cash and you now pay about 10 grand roughly a third of it in taxes of

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taxes about the same amount you invested in the first place yep lots of hard work

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lots of taxes how's that feel?

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