1.) The date of a stock sale is also the trade date. This is Important, as gains on investments held for more than a year are taxed at lower rates than on those held for less than a year.
2.) Your basis may be increased by reinvested mutual fund dividends.
3.) You can use up to $3,000 of the excess to offset ordinary income when capital losses exceed capital gains. If your losses are greater than $3,000, you can use the extra amount to reduce your taxable income in future years.
Capital losses:
Everyone with any investment experience can tell you, things don't always go up in value. They go down, too. If you sell something for less than its basis, you have a capital loss. Capital losses from investments—but not from the sale of personal property—can be used to offset capital gains. So, if you have $50,000 in long-term gains from the sale of one stock, for example, but $20,000 in long-term losses from the sale of another, then you may only be taxed on $30,000 worth of long-term capital gains.
If capital losses exceed capital gains, you may be able to use the loss to offset up to $3,000 of ordinary income. If you have more than $3,000 in excess capital losses, the amount over $3,000 can be carried forward to future years to offset capital gains or income in those years.
Note that if your investment is a “Qualified Small Business” you may be able to deduct 100%of the loss against ordinary income right away.
Capital gains:
Capital gain occurs when you sell something for more than you spent to acquire it. This happens a lot with investments, but it applies to personal property, too. Buy a used car for $3,000 and sell it for $5,000 a week later, and you have a $2,000 capital gain—same as if you bought stock for $3,000 and sold it for $5,000. Every taxpayer should understand a few basic facts about capital gains taxes.
Anyone who sells a capital asset should know that capital gains tax may apply. And as the Internal Revenue Service points out, just about everything you own qualifies as a capital asset. That's the case whether you bought it as an investment, such as stocks or property, or for personal use, such as a car or a big-screen TV. If you sell something for more than your "basis" in the item, then the difference is a capital gain, and you’ll need to report that gain on your taxes. Your basis is usually what you paid for the item. It includes not only the price of the item but any other costs you had to pay to acquire it, including:
In addition, money spent on improvements that increase the value of the asset—such as a new addition to a building—can be added to your basis. Depreciation of an asset can reduce your basis.
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