While retailers are worried about holiday spending, stock investors may have another yearend worry: taxes.
With the market hovering around 1999 levels, some investors will not be worried about taxes on gains in 2009.
However, others may find themselves in some tax hot water if they have had a profit from the sale of a security this year.
In general, taxes are calculated based on three factors:
- What you paid for the stock
- What you sold the stock for
- The length of time in between the purchase and sale
The market is up substantially from its early March 2009 bottom, however it is still down from prices before the bust in the fall of 2008.
If you got into a stock when it was near its bottom and sold for a profit in 2009, you will likely owe taxes on that transaction.
You may have a "tax event" for several reasons.
The important thing to remember is you may be able to take steps before the end of the year to offset that gain, but the time to plan this tax strategyis now.
Always consult a competent tax advisor before attempting any offsetting stock sales.
Don't give back a big chunk of a gain this year for lack of a tax plan.
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