vania-janet/multiturn-rag-retrieval-data huggingface dataset:
"I'd agree that this can seem a little unfair, but it's an unavoidable consequence of the necessary practicality of paying out dividends periodically (rather than continuously), and differential taxation of income and capital gains. To see more clearly what's going on here, consider buying stock in a company with extremely simple economics: it generates a certain, constant earnings stream equivalent to $10 per share per annum, and redistributes all of that profit as periodic dividends (let's say once annually). Assume there's no intrinsic growth, and that the firm's instrinsic value (which we'll say is $90 per share) is completely neutral to any other market factors. Under these economics, this stock price will show a ""sawtooth"" evolution, accruing from $90 to $100 over the course of a year, and resetting back down to $90 after each dividend payment. Now, if I am invested in this stock for some period of time, the fair outcome would be that I receive an appropriately time-weighted share of the $10 annual earnings per share, less my tax. If I am invested for an exact calendar year, this works as I'd expect: the stock price on any given day in the year will be the same as it was exactly one year earlier, so I'll realise zero capital gain, but I'll have collected a $10 taxed dividend along the way. On the other hand, what if I am invested for exactly half a year, spanning a dividend payment? I receive a dividend payment of $10 less tax, but I make a capital loss of -$5. Overall, pre-tax, I'm up $5 per share as expected. However, the respective tax treatment of the dividend payment (which is classed as income) and the capital gains is likely to be different. In particular, to benefit from the ""negative"" taxation of the capital loss I need to have some positive capital gain elsewhere to offset it - if I can't do that, I'm much worse off compared to half the full-year return.
I never intended to get into a big debate on taxation. My point was that a buyback is the sane as a divided.  Would you agree to that? Here's an interesting test. Does he have the same problem with dividend producing stocks? If he does then how else are firms supposed to give s return to investors?  (Don't even think about saying through price appreciation because I'm sure you also have a rant for the drive for stock price.)  This isn't a do we tax or not.  That's overly broad for this piece.  Also he isn't talking about taxing away profits but using taxes to cause businesses to make investments.  Wouldn't you agree that if that extra factory was unproductive if it wouldnt have had an economical case to be invested in otherwise? Issuing taxes as a blunt tool to cause businesses to throw money at random projects is about the definition of misallocation.  Can we agree to this, absent a taxation debate i generally avoid like the plague?  You really are in a corner on how a company effectively passes a return to those who invested in them without subverting the whole pricing mechanism. Unless that is your point to do. Government control for all investments yeah!
&gt; It will have minimal effects on buy &amp; hold traders since they typically research for a long time, then buy &amp; hold stock for many months.  This is the part I never understand. If a short term tax doesn't affect buy &amp; hold traders, when why would HFT affect buy &amp; hold traders?
I'm not sure where people keep getting this idea, but I see it come up a lot. Anyway, you pay capital gains taxes when you sell an investment that has appreciated. It makes no difference when/if you reinvest the money or what you invest it in. If you are afraid of the tax burden you can minimize it by: 1) Selling a stock that you have held longer than a year to get the lower long-term rate. 2) Sell a stock that hasn't appreciated that much and therefore doesn't have a lot of gains to tax. 3) Sell a stock that's below purchase price (i.e. at a loss) to offset any short term gains.
If you buy US stocks when the CAD is high and sell them when the CAD is lower you will make a currency gain on top of any profit or loss from the stock investments. If you buy US stocks when the CAD is low and sell when the CAD is higher any profits from gains from the stock investment will be reduced and any losses will be increased. If you are just starting out you may be better off investing in your own country to avoid any currency risk adding to your stock market risk.
"It sounds like ""bonus shares"" are the same as a stock dividend. Stock dividends are equivalent to a stock split except for accounting treatment (good explanation here: http://www.accountingcoach.com/online-accounting-course/17Xpg05.html). As an investor, the only likely effect of a stock dividend is to make it more complex to keep track of cost basis and do your taxes. There's no economic effect, it's just rearranging accounting numbers."
Equal sized gains and losses in alternating years would lead to an   unjust positive tax. On the contrary. If I can take my gains at the long term rate (15%) in even years, but take losses in odd years, up to $3000, or let them offset short term gains at ordinary rate, I've just gamed the system.  What is the purpose of the wash sale rule? Respectfully, we here can do a fine job of explaining how a bit of tax code works. And we can suggest the implication of those code bits. But, I suspect that it's not easy to explain the history of particular rules. For wash sale, the simple intent is to not let someone take a loss without actually selling the stock for a time. You'd be right to say the +/- 30 days is arbitrary.  I'd ask you to keep 2 things in mind if you continue to frequent this board -
I haven't seen anyone mention tax considerations and that's why I'm answering this. The rest of my answer is probably covered in the aggregate of other responses. Here's how I would look at this in a taxable (not an IRA) account: This could be an opportunity to harvest the tax losses to offset taxable gains this year or in future years. Unless I have compelling reasons to believe that the price will recover by at least (Loss% x ApplicableTaxRate) in the next 31 days then I would take the known - IRS tables - opportunities over the unknown. Here's what I would consider for all accounts: Is this the most likely place to earn a good return on my money and is it contributing to a strategy that fits my risk tolerance? You might need to get some emotional distance from the pain to make this determination objectively. As you consider your trading and investment strategy going forward consider that when it hurts and you have to pull yourself up by the bootstraps to think clearly about your situation, you were most likely trading with too much size for you in that particular position. I'm willing to make exceptions to that rule of thumb, but it's a good way to use the painful losses as a gut check on how your strategy fits your real situation. P.S. All traders experience individual losses that hurt and find their way to the most suitable strategies for them through these painful experiences.
Not knowing the US laws at all, you should worry more about having the best stock portfolio and less about taxes. My 0,02€
Any profits you realize are considered a long term capital gain by the IRS since you have held the asset for longer than a year. The IRS guidance on virtual currency considers bitcoins to be a form of personal property. Gains from selling bitcoins are considered a capital gain. See the IRS guidance on reporting capital gains (Schedule D).
"You have a sequence of questions here, so a sequence of answers: If you stopped at the point where you had multiple wins with a net profit of $72, then you would pay regular income tax on that $72. It's a short term capital gain, which does not get special tax treatment, and the fact that you made it on multiple transactions does not matter. When you enter your next transaction that takes the hypothetical loss the question gets more complicated. In either case, you are paying a percentage on net gains.  If you took a two year view in the second case and you don't have anything to offset your loss in the second year, then I guess you could say that you paid more tax than you won in the total sequence of trades over the two years. Although you picked a sequence of trades where it does not appear to play, if you're going to pursue this type of strategy then you are likely at some point to run into a case where the ""wash sale"" rules apply, so you should be aware of that.  You can find information on this elsewhere on this site and also, for example, here: http://www.marketwatch.com/story/understanding-the-wash-sale-rules-2015-03-02  Basically these rules require you to defer recording a loss under some circumstances where you have rapid wins and losses on ""substantially identical"" securities. EDIT A slight correction, you can take part of your losses in the second year even if you have no off-setting gain.  From the IRS: If your capital losses exceed your capital gains, the amount of the excess loss that you can claim on line 13 of Form 1040 to lower your income is the lesser of $3,000, ($1,500 if you are married filing separately)"
With a short position you make your money (profit) when you buy the stocks back to close the position at a lower price than what you bought them at. As short selling is classed as speculation and not investing and you at no time own any actual assets, you cannot donate any short possition to charity. If you did want to avoid paying tax on the profits you could donate the proceeds of the profits after closing the position and thus get a tax deduction equal to the profits you made. But that raises a new and more important question, why are you trading in the first place if you are afraid to make profits in case you have to pay tax on those profits?
Withdrawals from a traditional 401(k) plan are always treated as cash income and the taxable portion is taxed at ordinary income tax rates, even if the money was held in stocks within the 401(k) plan and the amount withdrawn is equal to whatever capital gains you made by selling the stock within the 401(k) plan. If your plan permits you to take the distribution as stock shares (transferred to your taxable brokerage account), then, for tax purposes, it is treated as if you took a distribution of cash equal to the market price of the shares as of the day of the distribution and promptly bought the same number of shares in your brokerage account.  And yes, if the 401(k) plan assets in your ex-employer's plan consists solely of pretax contributions and the earnings thereon, then the entire distribution is ordinary taxable income regardless of whether you sold the stock within the 401(k) plan or took a distribution of stock from the plan and promptly (or after a few days) sold it. The capital gains or losses (if any) from such a sale are, of course, outside the 401(k) plan and taxable accordingly. Finally, the 10% penalty for premature withdrawal from a traditional 401(k) will also apply if you are not 59.5 years of age or older (or maybe 55 since you are separated from service), and it will be computed on the entire distribution.
Almost any kind of tax will cause market distortions; if market distortions discourage activities which would have produced wealth, society will lose out not only on the money which was taken by the tax, but also on the wealth which could have been, but wasn't, produced. If those setting tax policy seek to maximize the amount of revenue that is made available for each dollar that the tax costs society, taxing money which is being used to produce more wealth will go against that goal.  Further, most of the things that companies do with their money to produce wealth end up generating taxable income for someone.  If a company deducts from its taxes the money it pays to an employee who then has to pay taxes on that money, the government ends up collecting about the same taxes as it would collect if the company didn't hire the employee (and thus didn't take the deduction). The effects of taxes on markets should be one of the most important factors considered when setting tax policy; if one tax would cost society $1.05 for every dollar raised, and another would cost society $5.00 for every dollar raised, a wise policy would favor the first over the second.  Unfortunately, politics often dominates over economic rationality.
Yes, to change which stocks you owe you need to sell one and buy the other, which for tax purposes means taking the profit or loss accrued up to then. On the other hand this establishes a new baseline, so you will not be double-faced on those gains. It just makes a mess of this year's tax return, and forced you to set aside some if the money to cover that.
The thing you get wrong is that you think the LLC doesn't pay taxes on gains when it sells assets.  It does. In fact, in many countries LLC are considered separate entities for tax properties and you have double taxation - the LLC pays its own taxes, and then when you withdraw the money from the LLC to your own account (i.e.: take dividends) - you pay income tax on the withdrawal again. Corporate entities usually do not have preferential tax treatment for investments. In the US, LLC is a pass-though entity (unless explicitly chosen to be taxed as a corporation, and then the above scenario happens). Pass-through entities (LLCs and partnerships) don't pay taxes, but instead report the gains to the owners, which then pay taxes as if the transaction was their personal one. So if you're in the US - investing under LLC would have no effect whatsoever on your taxes, or adverse effect if you chose to treat it as a corporation. In any case, investing in stocks is not a deductible expense, and as such doesn't reduce profits.
Returns reported by mutual funds to shareholders, google, etc. are computed after all the funds' costs, including Therefore the returns you see on google finance are the returns you would actually have gotten.
The tax cost at election should be zero.  The appreciation is all capital gain beyond your basis, which will be the value at election. IRC §83 applies to property received as compensation for services, where the property is still subject to a substantial risk of forfeiture.  It will catch unvested equity given to employees. §83(a) stops taxation until the substantial risk of forfeiture abates (i.e. no tax until stock vests) since the item is revocable and not yet truly income.  §83(b) allows the taxpayer to make a quick election (up to 30 days after transfer - firm deadline!) to waive the substantial risk of forfeiture (e.g. treat shares as vested today). The normal operation of §83 takes over after election and the taxable income is generally the value of the vested property minus the price paid for it.  If you paid fair market value today, then the difference is zero and your income from the shares is zero. The shares are now yours for tax purposes, though not for legal purposes.  That means they are most likely a capital asset in your hands, like other stocks you own or trade.  The shares will not be treated as compensation income on vesting, and vesting is not a tax matter for elected shares. If you sell them, you get capital gain (with tax dependent on your holding period) over a basis equal to FMV at the election.  The appreciation past election-FMV will be capital gain, rather than ordinary income.  This is why the §83(b) election is so valuable.  It does not matter at this point whether you bought the restricted shares at FMV or at discount (or received them free) - that only affects the taxes upon §83(b) election.
If you do get a paper certificate, you'll have to deal with considerably more hassle and delay if you want to sell later. Brokers charge a commission, which is a fee per trade. Let's say the commission is $10/trade. If you buy 5 shares of Google at $739/share, you'd pay $739 * 5 + $10 = $3705 and wind up with $3695 worth of stock in your account. You'd pay the same commission when you sell the stock. Can anyone buy/own/use a stock? Pretty much. A brokerage is going to require that you be a legal adult to maintain an account with them. There are generally ways in which a parent can open an account on behalf of an underage child though. There can be different types of restrictions when it comes to investing in companies that are not publicly held, but that's not something you need to worry about. Stocks available on the public stock market are available to, well, the public. How are stocks taxed? Taxes differ from country to country, but as a general rule, you do have to provide the tax authorities with sufficient information to determine what you owe. This means figuring out how much you purchased the stock for and comparing that with how much you sold it for to determine your gain or loss. In the US (and I suspect in many other countries), your brokerage will produce an annual report with at least some of this information and send it to the tax authorities and you. You or someone you hire to do your taxes will use that report to compute the amount of tax owed. Your brokerage will generally keep track of your ""cost basis"" (how much you bought it for) for you, though it's a good idea to keep records. If you refuse to tell the government your cost basis, they can always assume it's $0, and then you'll pay more tax than you owe. Finding the cost basis for old investments can be difficult many years later if the records are lost. If you can determine when the stock was purchased, even approximately, it's possible to look back at historical price data to determine the cost.
Look at the how the income statement is built. The stock price is nowhere on it. The net income is based on the revenue (money coming in) and expenses (money going out).  Most companies do not issue stock all that often. The price you see quoted is third parties selling the stock to each other.
In Canada, it is similarly taxed as CQM states. Mining is considered business income and you need to file a T1 form. Capital appreciation is no different than treating gains from stock.
"Yes- you do not realize gains or losses until you actually sell the stock.  After you sell the initial stocks/bonds you have realized the gain.  When you buy the new, different stocks you haven't realized anything until you then sell those. There is one exception to this, called the ""Wash-Sale Rule"".  From Investopedia.com: With the wash-sale rule, the IRS disallows a loss deduction from the   sale of a security if a ‘substantially identical security' was purchased within 30 days before or after the sale.  The   wash-sale period is actually 61 days, consisting of the 30 days before   and the 30 days after the date of the sale. For example, if you bought   100 shares of IBM on December 1 and then sold 100 shares of IBM on   December 15 at a loss, the loss deduction would not be allowed.   Similarly, selling IBM on December 15 and then buying it back on   January 10 of the following year does not permit a deduction. The   wash-sale rule is designed to prevent investors from making trades for   the sole purpose of avoiding taxes."
In a comment on this answer you asked  It's not clear to me why the ability to defer the gains would matter (since you never materially benefit until you actually sell) but the estate step up in basis is a great point! Could you describe a hypothetical exploitive scenario (utilizing a wash sale) in a little more detail?  This sounds like you still have the same question as originally, so I'll take a stab at answering with an example.   I sell some security for a $10,000 profit.  I then sell another security at a $10,000 loss and immediately rebuy.  So pay no taxes (without the rule).  Assuming a 15% rate, that's $1500 in savings which I realize immediately.  Next year, I sell that same security for a $20,000 profit over the $10,000 loss basis (so a $10,000 profit over my original purchase).  I sell and buy another security to pay no taxes.  In fact, I pay no taxes like this for fifty years as I live off my investments (and a pension or social security that uses up my tax deductions).  Then I die.  All my securities step up in basis to their current market value.  So I completely evade taxes on $500,000 in profits.  That's $75,000 in tax savings to make my heirs richer.  And they're already getting at least $500,000 worth of securities.   Especially consider the case where I sell a privately held security to a private buyer who then sells me back the same shares at the same price.   Don't think that $10,000 is enough?  Remember that you also get the original value.  But this also scales.  It could be $100,000 in gains as well, for $750,000 in tax savings over the fifty years.  That's at least $5 million of securities.   The effective result of this would be to make a 0% tax on capital gains for many rich people.   Worse, a poorer person can't do the same thing.  You need to have many investments to take advantage of this.  If a relatively poor person with two $500 investments tried this, that person would lose all the benefit in trading fees.  And of course such a person would run out of investments quickly.   Really poor people have $0 in investments, so this is totally impractical.
Overall, pre-tax, I'm up $5 per share as expected. However, the respective tax treatment of the dividend payment (which is classed as income) and the capital gains is likely to be different. In particular, to benefit from the ""negative"" taxation of the capital loss I need to have some positive capital gain elsewhere to offset it - if I can't do that, I'm much worse off compared to half the full-year return. Further, even if I can offset against a gain elsewhere the effective taxation rates are likely to be different - but note that this could work for or against me (if my capital gains rate is greater than my income tax rate I'd actually benefit). And if I'm invested for half a year, but not spanning a dividend, I make $5 of pure capital gains, and realise a different effective taxation rate again. In an ideal world I'd agree that the effective taxation rate wouldn't depend on the exact timing of my transactions like this, but in reality it's unavoidable in the interests of practicality. And so long as the rules are clear, I wouldn't say it's unfair per se, it just adds a bit of complexity."
This really comes down to tax structuring (which I am not an expert on), for public companies the acquiror almost always pays for the cash to prevent any taxable drawdown of overseas accounts, dividend taxes suck, etc.  For a private company, first the debt gets swept, then special dividend out - dividends received by the selling corporate entity benefit from a tax credit plus it reduces the selling price of the equity, reducing capital gains taxes.