vania-janet/multiturn-rag-retrieval-data huggingface dataset:
You wouldn't fill out a 1099, your employer would or possibly whoever manages the stock account.   The 1099-B imported from E-Trade says I had a transaction with sell price ~$4,500.   Yes.  You sold ~$4500 of stock to pay income taxes.  Both the cost basis and the sale price would probably be ~$4500, so no capital gain.  This is because you received and sold the stock at the same time.  If they waited a little, you could have had a small gain or loss.   The remainder of the stock has a cost basis of ~$5500.   There are at least two transactions here.   In the future you may sell the remaining stock.  It has a cost basis of ~$5500.  Sale price of course unknown until then.  You may break that into different pieces.  So you might sell $500 of cost basis for $1000 with a ~$500 capital gain.  Then later sell the remainder for $15,000 for a capital gain of ~$10,000.
Say for example a trade totals $10,000.  A flat tax of 0.2% would be $20.  This is not much for the Buy &amp; Holder b/c he only makes a few trades a year, say 10 transactions a year.  So their tax is only about $200 per year. (heck we could even drop it to 0.1%).  But DayTraders will routinely do 10 trades a day, or over 3000 trades a year.  So using that same 10K trade above, that could hypothetically be 3000x20 = $60,000 per year in taxes.  Computer Traders will do hundreds of trades per day.  Say 30,000 trades per year.  So that is $600,000.  So you can see how iit hardly affects legitimate investors, while making the HF traders control themselves a bit.  This is what we want.  The exchanges charge the flat tax with the transaction like a Sales tax.  It avoids excess regulation (the SEC already monitors trades, or is supposed to), and it hurts the gamblers (HFTs), while not hindering the good guys (investors).
"Very interesting question. While searching i also found that some precious metal ETFs (including IAU) gains are taxed at 28% because IRS considers it ""collectible"", rather than the usual long term 15% for stocks and stock holding ETFs. As for capital gain tax you have to pay now my guess it's because of the following statement in the IAU prospectus (page 34): When the trust sells gold, for example   to pay expenses, a Shareholder will   recognize gain or loss ...."
Generally, ETFs and mutual funds don't pay taxes (although there are some cases where they do, and some countries where it is a common case). What happens is, the fund reports the portion of the gain attributed to each investor, and the investor pays the tax. In the US, this is reported to you on 1099-DIV as capital gains distribution, and can be either short term (as in the scenario you described), long term, or a mix of both. It doesn't mean you actually get a distribution, though, but if you don't - it reduces your basis.
According to the answers to this question, you generally aren't taxed on gains until you sell the asset in question. None of those answered specifically for the U.K., so perhaps someone else will be able to weigh in on that. To apply those ideas to your question, yes your gains and losses are taxable. If you originally traded something worth $100 for the bitcoins, then when you converted back to dollars you received $200, you would have a $100 gain, simply on the foreign exchange trade. That is, this $100 of income is in addition to any income you made from your business (selling goods).
You buy stocks for dividends over the long term.  If a share of stock pays $1.00 in dividends every quarter, that's four dollars a year.  If you bought it for $40, it pays out $4 in a year, and it's still worth roughly $40 at the end of the year, you're $4 richer.  People will often invest large amounts of money in stable stocks not planning to sell it, but only collect the dividends which are either re-invested or pulled out as income.
As long as the tax rate is below 100%, there is still money to make. You pay taxes on your gain, not on your trading volume. Taxed income is still income - many people seem to get that wrong.
You can keep the cash in your account as long as you want, but you have to pay a tax on what's called capital gains. To quote from Wikipedia: A capital gain is a profit that results from investments into a capital asset, such as stocks, bonds or real estate, which exceeds the purchase price. It is the difference between a higher selling price and a lower purchase price, resulting in a financial gain for the investor.[1] Conversely, a capital loss arises if the proceeds from the sale of a capital asset are less than the purchase price. Thus, buying/selling stock counts as investment income which would be a capital gain/loss. When you are filing taxes, you have to report net capital gain/loss. So you don't pay taxes on an individual stock sale or purchase - you pay tax on the sum of all your transactions.  Note: You do not pay any tax if you have a net capital loss. Taxes are only on capital gains.  The amount you are taxed depends on your tax bracket and your holding period. A short term capital gain is gain on an investment held for less than one year. These gains are taxed at your ordinary income tax rate. A long term capital gain is gain on an investment held for more than one year. These gains are taxed at a special rate: If your income tax rate is 10 or 15%, then long term gains are taxed at 0% i.e. no tax, otherwise the tax rate is 15%. So you're not taxed on specific stock sales - you're taxed on your total gain. There is no tax for a capital loss, and investors sometimes take profits from good investments and take losses from bad investments to lower their total capital gain so they won't be taxed as much. The tax rate is expected to change in 2013, but the current ratios could be extended. Until then, however, the rate is as is.  Of course, this all applies if you live in the United States. Other countries have different measures. Hope it helps!  Wikipedia has a great chart to refer to: http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States.
You pay taxes on capital gains when you realize your gains by selling the investment property.  Also, in the US, taxes on capital gains are computed at special rates depending on your current income level, and so when you realize your gains two years from now, you will pay taxes on the gains at the special rate then applicable to your income level for the year of sale. Remember also that the US Congress  can change the tax laws at any time between now and the time you sell your stocks, and so the rates you are looking at now may have changed too.
Dividends are supposed to be paid from company profits (in the current or previous financial years), there are nuances around what profits mean from country to country, but the link is the UK definition from the HMRC. Profits from previous financial years are commonly called retained earnings. There are a few items around this
As you have indicated, the 1042-S reflects no income or withholding.  As such, you are not required to file a US tax return unless you have other income from the US.  Gains on stocks are not reported until realized upon sale. FYI, your activity does not fit the requirements of being engaged in a trade or business activity.  While the definition is documented in several places of the Code, I have attached Publication 519 which most accurately represents the application to your situation as you have described it. https://www.irs.gov/publications/p519/ch04.html#en_US_2016_publink1000222308
Dividend income is taxable as part of your income right away, however taxes on capital gains only happen when you sell the asset in question, and also has a lower tax rate. If you buy and hold Berkshire Hatheway, you will not have to pay taxes on the gains you get until you decide to sell the shares, and even then the tax rate will be lower. If you are investing for retirement, this is great, since your income from other sources will be lower, so you can afford to be taxed then. In many jurisdictions, income from capital gains is subject to a different tax rate than the rest of your income, for example in the US for most people with money to invest it's either 15% or 20%, which will be lower than normal income tax would be (since most people with money to invest would be making enough to be in a higher bracket). Say, for example, your income now is within the 25% bracket. Any dividend you get will be taxed at that rate, so let's say that the dividend is about 2% and the growth of the stock is about 4%. So, your effective growth rate after taxation is 5.5% -- you lose 0.5% from the 25% tax on the dividend. If, instead, you had stock with the same growth but no dividend it would grow at a rate of 6%. If you never withdrew the money, after 20 years, $1 in the dividend stock would be worth ~$2.92 (1.055^20), whereas $1 in the non-dividend stock would be worth ~$3.21 (1.06^20). You're talking about a difference of 30 cents per dollar invested, which doesn't seem huge but multiply it by 100,000 and you've got yourself enough money to renovate your house purely out of money that would have gone to the government instead. The advantage here is if you are saving up for retirement, when you retire you won't have much income so the tax on the gains (even ignoring the capital gains effect above) will definitely be less then when you were working, however if you had a dividend stock you would have been paying taxes on the dividend, at a higher rate, throughout the lifetime of the investment.
At the end of each calendar year the mutual fund company will send you a 1099 form. It will tell you and the IRS what your account earned. You will see boxes for: You will end up paying taxes on these, unless the fund is part of a 401K or IRA. These taxes will be due even if you never sold any shares. They are due even if it was a bad year and the value of your account went down. Most if not all states will levy an income tax yon your dividends and capital gains each year. When you sell your shares you may also owe income taxes if you made a profit. The actual taxes due is a more complex calculation due to long term vs short term, and what other gains or losses you have. Partial sales also take into account which shares are sold.
Profit margins. The difference goes to shareholders as new equity every quarter. You don’t need growth to see a return on equity. The consumer staple sector is a great example of this. They’ve had negative to 0 revenue growth, yet have posted respectable returns since the recession.
Note that you're asking about withholding, not about taxing.  Withholding doesn't mean this is exactly the tax you'll pay: it means they're withholding a certain amount to make sure you pay taxes on it, but the tax bill at the end of the year is the same regardless of how you choose to do the withholding.  Your tax bill may be higher or lower than the withholding amount. As far as tax rate, that will be the same regardless - you're just moving the money from one place to the other.   The only difference would be that your tax is based on total shares under the plan - meaning that if you buy 1k shares, for example, at $10, so $1,500 discounted income, if you go the payroll route you get (say) $375 withheld.  If you go the share route, you either get $375 worth of stock (so 38 shares) withheld (and then you would lose out on selling that stock, meaning you don't get quite as much out of it at the end) or you would ask them to actually buy rather more shares to make up for it, meaning you'd have a slightly higher total gain.  That would involve a slightly higher tax at the end of it, of course. Option 1:  Buy and then sell $10000 worth, share-based withholding.  Assuming 15% profit, and $10/share at both points, then buy/sell 1000 shares, $1500 in profit to take into account, 38 shares' worth (=$380) withheld.  You put in $8500, you get back $9620, net $1120.   Option 2:  Buy and then sell $13500 worth, share based withholding.  Same assumptions.  You make about $2000 in pre-tax profit, meaning you owe about $500 in tax withholding.  Put in $11475, get back $13000, net $1525.  Owe 35% more tax at the end of the year, but you have the full $1500 to spend on whatever you are doing with it. Option 3:  Buy and then sell $1000 worth, paycheck withholding.  You get the full $10000-$8500 = $1500 up front, but your next paycheck is $375 lighter.  Same taxes as Option 1 at the end of the year.
There are many reasons, which other answers have already discussed. I want to emphasize and elaborate on just one of the reasons, which is that it avoids double taxation, especially on corporate earnings.  Generally, for corporations, its earnings are already taxed at around 40% (for the US - including State income taxes). When dividends are distributed out, it is taxed again at the individual level. The effect is the same when equity is sold and the distribution is captured as a capital gain. (I believe this is why the dividend and capital gain rates are the same in the US.) For a simplistic example, say there is a C Corporation with a single owner. The company earns $1,000,000 before income taxes. It pays 400,000 in taxes, and has retained earnings of $600,000. To get the money out, the owner can either distribute a dividend to herself, or sell her stake to another person. Either choice leads to $600,000 getting taxed at another 20%~30% or so at the individual level (depending on the State). If we calculate the effective rate, it is above 50%! Many people invest in stock, including mutual funds, and the dividends and capital gains are taxed at lower rates. Individual tax returns that contain no wage income often have very low average tax rates for this reason. However, the investments themselves are continuously paying out their own taxes, or accruing taxes in the form of future tax liability.
The business and investment would be shown on separate parts of the tax return. (An exception to this is where an investment is related and part of your business, such as futures trading on business products)  On the business side of it, you would show the transfer to the stocks as a draw from the business, the amount transferred would then be the cost base of the investment.  For taxes, you only have to report gains or losses on investments.
may result in more taxes when Fund shares are held in a taxable   account. When the fund manager decides to sell shares of a stock, and those shares have grown in value, that growth is a capital gain. If that fund is part of a taxable account then the investors in the fund will have to declare that income/gain on their tax forms. That could require the investors to have to pay taxes on those gains.  Of course if the investors are holding the fund shares in a IRA or 401K then there are no taxes due in the near term. A higher portfolio turnover rate may indicate higher transaction   costs...  ...These costs, which are not reflected in annual fund operating   expenses or in the previous expense examples, reduce the Fund’s   performance. The annual fund operating expenses are the expenses that they can assume will happen every year. They include salaries, the cost of producing statements, paperwork required by the government, research... It doesn't include transaction costs. Which they can't estimate what they will be in advance. If the fund invests in a particular segment of the market, and there is a disruption in that segment, they may need to make many new investments. If on the other hand last year they made great choices the turnover may be small this year. During the most recent fiscal year, the Fund’s portfolio turnover rate   was 3% of the average value of its portfolio. That may be your best indicator.
I am not a tax professional, only an investment professional, so please take the following with a grain of salt and simply as informational guidance, not a personal recommendation or solicitation to buy/sell any security or as personal tax or investment advice. As Ross mentioned, you need to consult a tax advisor for a final answer concerning your friend's personal circumstances. In my experience advising hundreds of clients (and working directly with their tax advisors) the cost basis is used to calculate tax gain or loss on ordinary investments in the US. It appears to me that the Edward Jones description is correct. This has also been the case for me personally in the US with a variety of securities--stocks, options, futures, bonds, mutual funds, and exchange traded funds.  From the IRS: https://www.irs.gov/uac/about-form-1099b Form 1099-B, Proceeds From Broker and Barter Exchange Transactions A broker or barter exchange must file this form for each person: Edward Jones should be able to produce a 1099b documenting the gains/losses of any investments. If the 1099b document is confusing, they might have a gain/loss report that more clearly delineates proceeds, capital returns, dividends, and other items related to the purchase and sale of securities.
No Tax would have been deducted at the time of purchase/sale of shares. You would yourself be required to compute your tax liability and then pay taxes to the govt. In case the shares sold were held for less than 1 year - 15% tax on capital gains would be levied. In case the shares sold were held for more than 1 year - No Tax would be levied and the income earned would be tax free. PS: No Tax is levied at the time of purchase of shares and Tax is only applicable at the time of sale of shares.
"For example, if I have an income of $100,000 from my job and I also   realize a $350,000 in long-term capital gains from a stock sale, will   I pay 20% on the $350K or 15%? You'll pay 20% assuming filing single and no major offsets to taxable income. Capital gains count towards your income for determining tax bracket. They're on line 13 of the 1040 which is in the ""income"" section and aren't adjusted out/excluded from your taxable income, but since they are taxed at a different rate make sure to follow the instructions for line 44 when calculating your tax due."
"In the US, dividends are presently taxed at the same rates as capital gains, however selling stock could lead to less tax owed for the same amount of cash raised, because you are getting a return of basis or can elect to engage in a ""loss harvesting"" strategy.  So to reply to the title question specifically, there are more tax ""benefits"" to selling stock to raise income versus receiving dividends.  You have precise control of the realization of gains.    However, the reason dividends (or dividend funds) are used for retirement income is for matching cash flow to expenses and preventing a liquidity crunch.  One feature of retirement is that you're not working to earn a salary, yet you still have daily living expenses.   Dividends are stable and more predictable than capital gains, and generate cash generally quarterly.  While companies can reduce or suspend their dividend, you can generally budget for your portfolio to put a reliable amount of cash in your pocket on schedule.  If you rely on selling shares quarterly for retirement living expenses, what would you have done (or how much of the total position would you have needed to sell) in order to eat during a decline in the market such as in 2007-2008?"
4) A capital gain can often be neutralized by a capital loss in another stock, so that no tax results. If you loose money on a stock that is paying dividends, you're still going to have to pay tax on that dividend. There are companies that borrow money to pay out that taxable-dividend each quarter, which seems like gross tax malpractice on the part of the CFO. (If the dividend paradox doesn't make sense, first consider the case that you owned ALL the shares of a company. It wouldn't matter to you at all on a pre-tax basis whether you got a $1000 company buyback or a $1000 dividend, because after the buyback/dividend you'd still own the entire company and $1000. The number of shares would be reduced, but objecting that you owned fewer shares after the buyback would be like saying you have become shorter if your height is measured in inches rather than centimeters.) [Of course, in the case of many shareholders you can get burned by failing to sell into the buyback when the share price is too high, but that is another matter.]"
"Long term: Assuming you sold stock ABC through a registered stock exchange, e.g., the Bombay Stock Exchange or the National Stock Exchange of India, and you paid the Securities Transaction Tax (STT), you don't owe any other taxes on the long term capital gain of INR 100. If you buy stock BCD afterwards, this doesn't affect the long term capital gains from the sale of stock ABC.  Short term: If you sell the BCD stock (or the ABC stock, or some combination therein) within one year of its purchase, you're required to pay short term capital gains on the net profit, in which case you pay the STT and the exchange fees and an additional flat rate of 15%.  The Income Tax Department of India has a publication titled ""How to Compute your Capital Gains,"" which goes into more detail about a variety of relevant situations."
"It is important to remember that the stock price in principle reflects the value of the company, so the market cap should drop upon issuance of the the dividend. However, the above reasoning neglects to consider taxes, which make the question a bit more interesting. The key fact is that different investors are going to get taxed on the dividend to varying degrees, ranging from 20% for qualified dividends in the USA for a high-income individual in a taxable account (and even worse for non-qualified dividends) to 0% for tax-exempt nonprofits, retirement accounts, and low-income individuals. The high-tax investors are going to be a bit averse to paying tax on that dividend, whereas the tax-free investors are not. Hence in a tax-rational market the tax-free investors are going to be the ones buying right before a dividend and the tax-paying investors will be buying right afterwards. Tax-exempt investors could in principle make some amount of money buying dividends to keep them off the tax-paying investors' books. (Of course, the strategy could backfire if too many people did it all at once.) That said, the tax-payers have the tax disincentive to prevent them from fully exploiting the opposite strategy of selling just before a dividend. In particular, they are subject to capital gains tax when they sell at a profit (unless they have enough compensating capital losses), and it is to their after-tax profit to defer taxation by not trading. That said, the stock market has well-known irrationality when it comes to considering tax consequences, so logic based on assumed rationality of the market does not always apply to the extent one would expect. The foremost example of tax-irrationality is the so-called ""dividend paradox"", which basically states that corporations should favor stock buybacks (or perhaps loan repayment) to the complete exclusion of dividends because capital gains are taxed less harshly than dividends in a variety of ways, some of which are subtle: 1) Historically (although not currently in the USA for qualified dividends) the tax rate was higher for dividends.
"Your employer should send you a statement with this information. If they didn't, you should still be able to find it through E*Trade. Navigate to: Trading & Portfolios>Portfolios. Select the stock plan account. Under ""Restricted Stock"", you should see a list of your grants. If you click on the grant in question, you should see a breakdown of how many shares were vested and released by date. It will also tell you the cost basis per share and the amount of taxes withheld. You calculate your cost basis by multiplying the number of released shares by the cost basis per share. You can ignore the ordinary income tax and taxes withheld since they will already have been included on your W2 earnings and withholdings. Really all you need to do is report the capital gain or loss from the cost basis (which if you sold right away will be rather small)."
Securities change in prices. You can buy ten 10'000 share of a stock for $1 each one day on release and sell it for $40 each if you're lucky in the future for a gross profit of 40*10000 = 400'0000