Stocks and taxes question

[FLASH_OUTDOORS]

Let’s say I deposited 5k into a brokerage firm. In 5months the 5k is now up to 15k. It I only cash out the original 5k investment, would the 5k I cash out be taxed as a short term Capitol gain?

If I cashed out 10k would the full 10k be taxed as short term gains or would you deduct the initial investment of 5k?

The idea of possibly paying tax on my initial investment doesn’t make sense to me.


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[RiverRat1]

Nothing to do with what you cash out unless you mean sell the stock... ?

You only pay tax on the gains after you sell.

[jomw10]

Let's say you deposit 5k into a brokerage account
You buy 1000 shares of X at $5 each... 5 months later each stock is worth $15, account is now worth $15,000
You sell $4,995 worth of stocks (333 shares).
You must pay short term capital gain on the price increase in the 333 shares you sold. So, $1,665 is not taxed as it's your original money, The rest is taxed as short term capital gain. There is still part of you original money in the stocks you didn't sell, which won't be taxed when you sell those. Any gain short or log will be taxed.

[rtp]

FYI, short term capital gains tax means the profit amount will be added to your ordinary income and where ever that puts you in the tax bracket is the rate of tax you will pay on it.

[FLASH_OUTDOORS]

Let's say you deposit 5k into a brokerage account
You buy 1000 shares of X at $5 each... 5 months later each stock is worth $15, account is now worth $15,000
You sell $4,995 worth of stocks (333 shares).
You must pay short term capital gain on the price increase in the 333 shares you sold. So, $1,665 is not taxed as it's your original money, The rest is taxed as short term capital gain. There is still part of you original money in the stocks you didn't sell, which won't be taxed when you sell those. Any gain short or log will be taxed.

Ok this makes total sense . Thank you


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[ElfEyes]

To avoid this I deposited 25k and reduced it to 7k in a few months. I think I would like to have your problem instead lol

[ShockValue]

To avoid this I deposited 25k and reduced it to 7k in a few months. I think I would like to have your problem instead lol

Haha....sounds like my usual investment strategy.

[db@100]

So, no tax is due until you sell any of the stock, correct?

[STGS]

So, no tax is due until you sell any of the stock, correct?

Unless you receive dividends/distributions or you are invested in mutual funds that have capital gain distributions associated with the funds. Each of these have tax implications and are usually detailed on your annual brokerage account tax statements.