1. CALCULATING CAPITAL GAINS TAXES ON THE PROFITABLE SALE OF STOCKS

2. COST BASIS BEFORE YOU CAN CALCULATE HOW MUCH CAPITAL GAINS TAX YOU OWE, YOU MUST FIGURE OUT YOUR COST BASIS FOR THE STOCK COST BASIS: AMOUNT YOU PAID FOR THE STOCK PLUS ANY APPLICABLE COMMISSIONS FOR EXAMPLE: YOU BUY 1000 SHARES OF XYZ STOCK FOR $20,000. YOU PAY $1000 COMMISSION YOUR COST BASIS FOR THIS INVESTMENT IS $21,000 OR $21 PER SHARE

3. CAPITAL GAINS TAX YOU WILL BE CHARGED A TAX ON THE SALE OF STOCKS IF YOU PROFIT YOU WILL ONLY PAY TAXES ON THE PROFIT PORTION OF YOUR SALE (SALE AMOUNT – COST BASIS) YOU WILL PAY A LARGER PERCENTAGE OF TAXES IF YOU’VE OWNED THE STOCK FOR LESS THAN ONE YEAR THIS IS KNOWN AS SHORT-TERM VS. LONG TERM CAPITAL GAINS

4. CAPITAL GAINS: SHORT TERM VS. LONG TERM WHILE THE ACTUAL PERCENTAGES VARY BASED ON EACH INDIVIDUAL INVESTOR’S INCOME AND TAX SITUATION, WE WILL USE THESE GUIDELINES FOR OUR EXAMPLE: SHORT TERM CAPITAL GAINS: TAXES ON PROFIT FROM SALE OF STOCK OWNED LESS THAN 1 YEAR LONG TERM CAPITAL GAINS: TAXES FROM PROFIT FROM SALE OF STOCK OWNED MORE THAN 1 YEAR

5. CAPITAL GAINS: SHORT TERM VS. LONG TERM IN OUR EXAMPLE: INVESTOR SELLS HIS 1000 XYZ SHARES FOR $34,000 PER SHARE AFTER 4 MONTHS $34,000 SALE PRICE - $21,000 COST BASIS = $13,000 PROFIT BASED ON HIS PERSONAL SITUATION, THIS INVESTOR WOULD BE LOOKING AT THE FOLLOWING CAPITAL GAINS TAX RATES: SHORT-TERM FEDERAL 28% NY STATE 6.65% LONG-TERM FEDERAL 15% NY STATE 6.65% FIND THE AMOUNT OWED IN TAXES TO FEDERAL AND STATE GOVERNMENTS DETERMINE INVESTOR’S ACTUAL PROFIT