|Forum - Gurus Answer Questions
||Gurus answer your questions about the art of trading.|
|From: tommcclure (Rep: 0)||Date: 11/06/2018 13:39|
|Forum: Gurus Answer Questions - Msg #649||Thread #674046212 (Rec: 0) |
|Hi all! I Have a question about taxes on trades.|
I am going to start trading. Not as much as a day trader, but I plan on being fairly active. Maybe a few trades a week or month.
I know I will pay short term capital gains on any profits. But I am not sure as to a certain situation.
Let's say I buy $1000 of ABC today and next week sell it for a $1500. That is a $500 profit and, if I stop there, when tax time comes I pay $500*.25 in taxes ($125). Simple enough.
But, what if I turn around and invest the entire $1500 in XYZ, and then sell it for $2000?
Do I now pay $500*.25 for each of these $500 profits?
I'm pretty sure that if my XYZ trade ended up losing $500, I could apply it as a loss, and it would be a wash--no taxes to pay on a $500 and a $500 gain.
But, I'm not sure of the two profitable trades, when the second trade uses the profits of the first trade.
Should I, after selling ABC for $500, put $125 aside to pay taxes with? This would mean that I would buy #1375 worth of XYZ.
I have a feeling it is less confusing than I am making it. Any help in seeing the light here would be greatly appreciated.
NOTE: This message was originally posted on 2018-11-06 11:16:31 by the tommcclure.
TheLion.com | About Us | Agreement & Disclaimer | Privacy | Twitter
© 1999- TheLion.com, Inc.