Stocks When you sell a stock at a profit you incur capital gains taxes, which are calculated according

to the amount of time that the stock is actually held . There are other considerations when investing in stocks. Selling short is borrowing a security (or commodity futures contract) from a broker and selling it, with the understanding that it must later be bought back (hopefully at a lower price) and returned to the broker. SEC rules allow investors to sell short only on an uptick or a zero-plus tick, to prevent "pool operators" from driving down a stock price through heavy short-selling, then buying the shares for a large profit. Short sells can have unlimited losses; you can only short a stock that has moved by at least 1/16. You must have a margin account to make a short sell so you are subject to margin calls if the stock increases quickly. Your broker can call back the stock at any time. Profits are taxed as shortterm capital gains. Some companies choose to distribute dividends, which are taxable payments given by a company to its shareholders out of the company's current or retained earnings. If the dividends paid are in the form of cash, those dividends are taxable. When a company issues a stock dividend, not cash, you do not have any tax consequences until you sell those shares. Stock Splits A Stock Split is the increase in number of outstanding shares of a company without any change in the shareholder's equity or market value. For example, if a company decides to give its current shareholders 2 shares for every 1 share that they currently own, each shareholder's proportion of ownership in the company won't change . There are no tax consequences when a stock split occurs, but you should be aware of pre-split and post-split prices for tax calculations of determining gains/losses. Employee Stock Options Employee stock options are an increasingly popular compensation perk, allowing employees to purchase shares of their employer's company at a specified price by a specific date. There are two different types: non-qualified stock options (NQSOs) and incentive stock options (ISOs). Taxes depend on the particular type of option, the holding period of the stock, and your marginal tax rate. When you exercise a NQSO, you owe ordinary income taxes on the difference between the market price and the exercise price. If you do not immediately sell the shares and hold them for more than a year, you will be taxed at the lower capital gains rate on any further profits when you sell. ISOs, on the other hand, are taxed as capital gains rather than ordinary income. If you hold the shares for at least 1 year and do not sell the shares until at least two years after your company issues the options to you, the gains are taxed as long-term capital gains. If you hold the shares for under a year, you will incur the higher short-term capital gains tax rate. Exercising ISOs could also trigger Alternative Minimum Taxes(AMTs) . If the difference between the exercise price and the market price of the stock at the time of exercise Ads by Google Tax Free Government Bonds – IRFC launches tax-free bonds issue to open on 21 Jan 2013

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instead. In this. Distributions of long-term capital gains are taxed at the minimum rate. sometimes funds buy and sell constantly in an attempt to maximize returns and generate big distributions. multiplied by the number of shares) as compensation. Capital Gains (the fund subtracts its capital losses from its capital gains to determine its net capital gains. it is said that the sale of stock is a qualifying disposition if you owned the stock for at least two years after the grant date and at least one year after the exercise date. the more you sell or exchange shares. shareholders pay capital gains taxes.rksv. Reinvested distributions are taxed in the same way as distributions paid to the is a positive adjustment to your income. Mutual fund distributions are reported to shareholders and to the IRS by the fund on Form 1099-DIV or a substitute statement. then it is calculated for Alternative Minimum The Tax Planner – Personal Tax Planning Corporate Tax Planning www. you have to pay this tax. No Hidden Costs! Do Unlimited Trading on Cash and FO www. if this is larger than your regular tax bill. the more capital gains you are likely to realize. whether or not the gain is distributed for a particular year. but these are subject to taxes. which it distributes to shareholders) Both forms of distribution are subject to federal income tax and often state and local taxes. Any additional gain is considered capital gain. except if the distributions were received in a tax-deferred account. Any additional gain is considered a capital There are two forms of distribution:   Income Dividends (interest and dividends generated by a fund's investments). A portion of the gain is considered ordinary income and will be reported as earned income. Mutual funds do not pay taxes on the capital gains from its investments. your employer will report the bargain element (market price at the exercise date minus the actual price paid for the stock. A disqualifying disposition happens when you owned the stock for two years or less after the grant date or for one year or less from the exercise date. the cost basis of the shares is increased. If dividends are .IndianMoney. or if the income dividend distributions are from municipal money market funds and municipal bond funds(these are exempt from federal taxes and in some cases state taxes). Income dividend distributions and short-term capital gains are taxed as ordinary income at your marginal tax rate. Enquire Now ! PropertyValuer. Mutual Funds Shareholders receive all the income or profits realized by a mutual fund . so seek long-term capital Ads by Google Capital Gain Tax – Valuation of Property in India Retd Military Engg. Buy and hold. Use tax-deferred accounts for tax-inefficient Start Earning Today – Zero brokerage. There are some things you can do in order to avoid getting hit with a big tax bill:    Look for funds with low turnover. Remember to include dividends in the cost of your investment or you might pay taxes on gains you never realized. . In the case of ISOs. therefore reducing your taxes when you sell the fund. which will cut into your gains.

Index Funds simply follow a stock index like the S&P 500. their goal is to keep taxable gains low. It is only the interest income that is tax-exempt for the state return. Tax-Managed or TaxEfficient Funds focus on after-tax returns.Best Investment Plans – Invest Rs 8300 pm and get Rs1.S. In Ads by Google . or a local government within your state. cities. while taxexempt bonds are bonds whose interest payments are not subject to federal income tax. If it is a Government Bond ( gains. NSE.Compare quotes PolicyBazaar. not on your state tax return. they have lower taxable distributions. Bonds issued by your state or county. and/or local income tax. Traders Traders are those investors who hold stocks and securities for a short period of time (less than a few days or even a few hours). www. seminar costs can be deducted as well as home office expenses in connection with investing. have taxable interest on both your federal and state tax returns. city or other municipality within your state. Bonds can be divided into two types. As the names suggest. MCX Intra day Tips & more PowerYourTrade. but not on your federal return. A bond is generally a promise to repay the principal along with interest on a specified date. These taxexempt bonds are typically issued by municipal. Treasury. county or state governments. taxable and tax-exempt.Moneycontrol. There are certain benefits of the trader status.S. One of the more attractive rules is that if you are a trader and you elect the Mark-to-Market election you could benefit from additional benefits:   the wash sale rule does not apply to your trading Free 7 Days Stock Advice – Get Daily Trading Ideas. and sometimes also state or local income tax. the loss is not subject to the $3. It is important to note that gains from the sale or redemption of municipal bonds and U. The Federal government.000 loss limitation . your state government. If the bond was issued by a governmental authority in a state other than the one where you reside. state. or U.  You can invest in other types of funds. so if you have a total annual loss. Savings bond). Top Stocks BSE. taxable bonds are ones for which interest payments are subject to federal.35Cr in return guaranteed. Treasury Bonds are taxable for both federal and state tax purposes. the interest is taxable only on your federal tax return. Traders can deduct their interest expense without itemizing. Bonds A Bond is a debt instrument issued for a period of more than one year with the purpose of raising capital by borrowing . The goal is to profit from short-term gains in the market. and many other types of institutions sell bonds. the interest is taxable on your state income tax return. Since the turnover is lower than 40%.mywealthclub. Bonds that were not issued by the federal Save Tax & Grow Wealth – Invest in Best Tax Saving Mutual Fund and Get an Assured Gift. gains are considered income. are tax-exempt on your federal and state tax return. The stock selection is generally based on things like charting which relate only to the stock price instead of a fundamental evaluation of the company as a business. whose interest payments are not subject to federal income tax. states. corporations.

html#ixzz2IzkzCxld .Tax Free Government Bonds – IRFC launches tax-free bonds issue to open on 21 Jan 2013 www. At the end of the year.investorwords. the APY will be greater than the periodic interest rate multiplied by the number of periods in the year Read more: http://www.rksv. your trading profits are treated as ordinary Best Intraday Tips – Pay Only When You Make Profits 90% Accuracy. and not as capital gains. The rate of return on an investment for a one-year period. APY is equal to one plus the periodic rate (expressed as a decimal) raised to the number of periods in one Maximum 80 D Tax Benefits – Financial Advice w Personal Touch! Get Relief u/s 80C. While there are certain advantages to filing as a this last case. Get Free Trial Now! BestStockIdeas. you must identify which stocks are to be treated as an investment. For an interestbearing deposit account. No Hidden Costs! Do Unlimited Trading on Cash and FO www. you also increase your risk for an audit. 24E IndianMoney. the IRS can still audit you and determine that you are not a trader in which case you might end up with additional taxes. Start Earning Today – Zero brokerage.bajajcapital. interest and penaltie Annual Percentage Yield Definition APY. any profits made from your stocks are to be reported as income except for those identified as investments in which case those will be treated as capital gains (realized or unrealized). Although the definition of a trader is not very Tax Saving Schemes – Get Tax Saving Funds w/FundsIndia's Free Online Investment Platform! FundsIndia. This can be an advantage if you have held a stock for more than a year and the gains are 80E. If you make the Mark-to-Market election. This value is then subtracted by one. such as a savings account. Due to compounding.

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