How does tax on stock works?

[TNTrulez]

Let say I bought some stocks and sold it at 20% higher for a capital gain. I then use that money to buy some stocks that lose like crazy (70% lost or so). I didn't report this on the tax form because I thought that the capital losts would cancel the capital gain?

 

[DaveSimmons]

You really shouldn't take tax advice from us, but you definitely need to report gains and losses, and you also want to take into account expenses.

www.fool.com probably has some links, pages, and suggested reading.

 

[BrunoPuntzJones]

You have to fill out a schedule D on your 1040. Your losses can actually be carried forward if it's a net loss.

 

[Evadman]

Originally posted by: BrunoPuntzJones
You have to fill out a schedule D on your 1040. Your losses can actually be carried forward if it's a net loss.

Which is real nifty! Expecialy now.

 

[FelixDeCat]

Originally posted by: TNTrulez
Let say I bought some stocks and sold it at 20% higher for a capital gain. I then use that money to buy some stocks that lose like crazy (70% lost or so). I didn't report this on the tax form because I thought that the capital losts would cancel the capital gain?

You are thinking correctly. You can match your gains with losses. But you must report in on Scedule D.

 

[TNTrulez]

Umm let say that this all happened two years ago. . . what now?

 

[Dacalo]

Originally posted by: TNTrulez
Umm let say that this all happened two years ago. . . what now?

two years ago? LOL

 

[FelixDeCat]

Originally posted by: Dacalo

Originally posted by: TNTrulez
Umm let say that this all happened two years ago. . . what now?

two years ago? LOL

I guess it depends on the amount. If we are talking under $1000.00 I wouldnt have a hard time sleeping at night, unless of course you are paraniod (which I am so I wouldnt have done this in the first place). Because at this point you are going to need professional advice or do some research. Obviously your conscience is bothering you, so perhaps you can 'research' on how to file amended return.

If its greater than $5,000 I would get a tax attorney and let him take care of it.

 

[DaveSimmons]

Stop watching bad movies and flee the country while you still can

 

[TNTrulez]

The thing is I only made like $200 in capital gains but I lost 1k in capital loses but I didn't file it with the IRS. Now I think they are going to audit me? I hope not but they are auditing someone that can lead to me. Ahh...

 

[BrunoPuntzJones]

So you had a net loss of $800?

You could technically carry that forward, like if you had $800 in gains the following year you could set it against that $800 loss.

I'd recommend asking a tax guy or maybe CPA. I don't want to say that it's probably safe to just let it go since it was a net loss....

 

[TNTrulez]

The thing is that I didn't get any gains next year. . I pulled out of the stock market after losing that money. . . so technically I got $800 net loss. . .which went unreported.

 

[axelfox]

I think it depends on whether if it is a long term or short term gain.

Or if you lost, then you can deduct that (or something like that)

That what I remember from my finance class

 

[DaveCSparty]

Basically, first you can net all your capital gains and losses.
If result = long term capital gain, it gets taxed at generally 10/15%.
If result = short term capital gain, no difference in treatment, it is ordinary income
If result = capital loss, you can deduct 3000 per year. whatever is left gets carried over indefinitely. you can net your capital gains in the future with it. Or if you don't have any, you can deduct 3000 every year until it is used up.

 

[DaveCSparty]

Oh, you can go back for up to three years to make changes to the returns that you have filed