RedlightG20 Posted December 13, 2007 Share Posted December 13, 2007 Can you get taxed on stocks that you lose money on? I understand you get taxed for capital gains, but for capital loss? Isn't that sorta like kicking you while you were down? Link to comment Share on other sites More sharing options...
DjTj Posted December 13, 2007 Share Posted December 13, 2007 No, you can actually deduct your capital losses against your capital gains, so it's like a tax refund. Link to comment Share on other sites More sharing options...
Predicto Posted December 13, 2007 Share Posted December 13, 2007 Can you get taxed on stocks that you lose money on? I understand you get taxed for capital gains, but for capital loss? Isn't that sorta like kicking you while you were down? Umm, no. You don't pay taxes on capital losses. In fact, you can use your capital losses to offset your capital gains so that you don't pay any taxes on those either. And if you didn't have any capital gains this year, you can carry over your losses over several years to offset future capital gains as well. Link to comment Share on other sites More sharing options...
RedlightG20 Posted December 13, 2007 Author Share Posted December 13, 2007 I know it doesn't make sense, but my roommate just got a thing from the comptroller of maryland that says theres been an adjustment of his return and that he owes like $500 on securities from 2005. He said he never made any money off of his investments and no longer does it.:whoknows: Link to comment Share on other sites More sharing options...
Predicto Posted December 13, 2007 Share Posted December 13, 2007 I know it doesn't make sense, but my roommate just got a thing from the comptroller of maryland that says theres been an adjustment of his return and that he owes like $500 on securities from 2005. He said he never made any money off of his investments and no longer does it.:whoknows: Maybe there was a mistake at the controller, or maybe your roomate is confused about what he did in 2005. Either way, you don't pay taxes on capital losses. Link to comment Share on other sites More sharing options...
RedlightG20 Posted December 13, 2007 Author Share Posted December 13, 2007 Thanks for the information guys, he's going to send them a letter requesting an explanation... Link to comment Share on other sites More sharing options...
CrazyZeb Posted December 13, 2007 Share Posted December 13, 2007 Was the comptroller in a white van? Link to comment Share on other sites More sharing options...
techboy Posted December 13, 2007 Share Posted December 13, 2007 In fact, there is a technique called "Tax Loss Harvesting", in which one sells stocks/funds while they are down (for the loss and accompanying tax writeoff), then either buys a similar but not identical security or holds the money for thirty days before buying back in (either way avoids the "wash rule" designed to prevent people from just buying and selling the same stock to take a taxable loss). Doing so can increase returns, if done carefully and properly. Link to comment Share on other sites More sharing options...
RedlightG20 Posted January 1, 2008 Author Share Posted January 1, 2008 Bump... So after some fighting with the IRS my roommate finally got a notice sort of explaining his charges. He is being taxed on the sales on a number of different stocks. From what it looks like, the IRS is only looking at what he pocketed from the sale of the stocks, and without knowing what the base price of the investment, they only see it as a capital gain and not a loss as it truly was. So does anyone have an idea on what the next step is now? Link to comment Share on other sites More sharing options...
Bostic Hog Posted January 1, 2008 Share Posted January 1, 2008 Bump...So after some fighting with the IRS my roommate finally got a notice sort of explaining his charges. He is being taxed on the sales on a number of different stocks. From what it looks like, the IRS is only looking at what he pocketed from the sale of the stocks, and without knowing what the base price of the investment, they only see it as a capital gain and not a loss as it truly was. So does anyone have an idea on what the next step is now? He's going to need to file an amended return, showing his cost basis for each of the securities in question. Link to comment Share on other sites More sharing options...
Larry Posted January 1, 2008 Share Posted January 1, 2008 I just had the same thing happen to me. Sold stocks, lost money, got bill. When you sell stocks, your broker notifies the IRS of the amount you sold them for. But the broker doesn't tell the IRS when you bought them, or how much you paid for them. So, as far as the IRS is concerned (if you do like me, and didn't mention your stocks on your return, because hey, you lost money, so there's no tax on it) whatever you sold the stock for is pure profit. File an amended return, and this time, list the stock sale, and show how much you paid for them, and when. In my case, I actually got a little bit more back, when I listed them. Link to comment Share on other sites More sharing options...
Fergasun Posted January 1, 2008 Share Posted January 1, 2008 Hmmmm..... my grandfather has given me various stocks over the past 20 years... I don't think my parents have kept all that detailed records, and for some reason the brokerage firm I work with didn't even keep records of the cost basis.... I sold some in 2006 and on the tax return just tried to estimate the cost basis... although it was a bit hard since the stock had split multiple times, there was some calculator I found on the web-page... at least my accountant asked me for a tax basis so I had to give her at least as honest of a number as I could get. I did some Internet research and there are some websites that talked about how to get a cost basis... since the stock I own had ended up splitting... I'll have to do this again this year too, and probably next year... Link to comment Share on other sites More sharing options...
chipwhich Posted January 1, 2008 Share Posted January 1, 2008 Hmmmm..... my grandfather has given me various stocks over the past 20 years... I don't think my parents have kept all that detailed records, and for some reason the brokerage firm I work with didn't even keep records of the cost basis.... I sold some in 2006 and on the tax return just tried to estimate the cost basis... although it was a bit hard since the stock had split multiple times, there was some calculator I found on the web-page... at least my accountant asked me for a tax basis so I had to give her at least as honest of a number as I could get. I did some Internet research and there are some websites that talked about how to get a cost basis... since the stock I own had ended up splitting... I'll have to do this again this year too, and probably next year... Your personal taxes would based on the price the stock was at when he transferred them to you. Link to comment Share on other sites More sharing options...
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