When liquidating stocks are commissions due
The letter is about 12-pages long and somewhere in the middle is a listing of omitted items and a calculation of the tax liability on those items.
If you receive one showing an omitted stock sale, don’t just pay the tax bill.
However, the IRS will not allow an investor to claim a capital loss if you sell a stock and buy it back within 30 days.
The “wash rule” prevents you from claiming a loss on a sale of stock if you buy replacement stock within the 30 days before or after the sale and you will lose the offset.
Certain circumstances applied to the variables can reduce your tax liability when you sell.
Many taxpayers believe they must pay taxes on the full amount of the check they receive from the sale--not true. The formula is: Sales Proceeds – Basis = Taxable Profit or Deductible Loss Sale proceeds can be reduced by commissions paid to the broker.
In fact, at this writing, the talk is that the current rates will remain in effect for the next two years.
It will also cut down on the number of amended tax returns that need to be filed as a result of omitting stock sales.
Bonnie Lee is an Enrolled Agent admitted to practice and representing taxpayers in all fifty states at all levels within the Internal Revenue Service.
You may apply capital losses against capital gains in the current and future years to net out the overall profit or loss.
Deductible Investment Expenses A tax deduction often overlooked by investors is the cost of management fees paid to brokers, usually for management of mutual fund accounts or for advisory services.