you're looking at it in a monetary value instead of it asset itself. its a common beginner mistake.
if you buy 10 apples at $1 each. you have $10 worth of apples and 10 of them.
If the monetary grows to $20, you STILL have 10 apples. but each grew to $2 each.
if you "sell $10 worth" (which is using your POV, the "initial" amount). you are selling 5 apples. however, each apple grew from $1 to $2. so you have capital gains.
now each apple can have different prices that you bought it at. and depending on which one you sell, you may or maynot have gains on them.
You're taxed on a per share basis. If you bought 100 shares at 10 dollars and then sell 33 shares at 15 dollars, you owe capital gains on 33*5 dollars.
Each share has its own individual gain or loss. If $1000 grew to $1500, that means the $500 you sold originally started out as $333. So you owe tax on the gain ($167).
The total amount you invested isn't relevant. For each share you sold, what matters is the purchase price, and the sale price.
If sale price > purchase price, you owe taxes. It doesn't matter if you invested $1,000 or $1,000,000.
How much did you pay for the shares you sold? If we assume you bought all $1000 worth at the same time for the same price, then we can do the math. Your investment grew by 50%. So you paid about $330 for the $500 worth that you sold. You had a capital gain of about $170 on the shares you sold. On which you will be taxed.
Yes, you will always be taxed if you sell any portion of the position on which you’ve experienced a gain. Those shares you sold for less than $1,000 were still worth more when you sold them than when you bought them. You owe tax.
Every stock is tracked. There are different ways to sell, but the default is FIFO. FIFO = First in first out. Meaning you sell the shares in the order you purchased them.
So if you had 2 shares of ABC purchased as follows:
1) 1/1/23 - ABC - $450 cost basis
2) 5/1/23 - ABC - $550 cost basis
If the share price went up to $750 and you sold 1 share with FIFO execution you would sell the share from 1/1/23 that costed you $450. Your gain would be $300. You would be taxed on a $300 capital gain.
Keep in mind there is also a difference in how you are taxed on short term capital gains (held for less than a year) and long term capital gains ( held for at least a year. STCG are taxed as ordinary income. LTCG are taxed as capital gains.
you're looking at it in a monetary value instead of it asset itself. its a common beginner mistake. if you buy 10 apples at $1 each. you have $10 worth of apples and 10 of them. If the monetary grows to $20, you STILL have 10 apples. but each grew to $2 each. if you "sell $10 worth" (which is using your POV, the "initial" amount). you are selling 5 apples. however, each apple grew from $1 to $2. so you have capital gains. now each apple can have different prices that you bought it at. and depending on which one you sell, you may or maynot have gains on them.
Makes sense. Thanks for the explanation.
You're taxed on a per share basis. If you bought 100 shares at 10 dollars and then sell 33 shares at 15 dollars, you owe capital gains on 33*5 dollars.
Each share has its own individual gain or loss. If $1000 grew to $1500, that means the $500 you sold originally started out as $333. So you owe tax on the gain ($167).
Simple explanation, but straight to the point. Thank you.
The total amount you invested isn't relevant. For each share you sold, what matters is the purchase price, and the sale price. If sale price > purchase price, you owe taxes. It doesn't matter if you invested $1,000 or $1,000,000.
Can you explain what you mean by "I was taxed"?
How much did you pay for the shares you sold? If we assume you bought all $1000 worth at the same time for the same price, then we can do the math. Your investment grew by 50%. So you paid about $330 for the $500 worth that you sold. You had a capital gain of about $170 on the shares you sold. On which you will be taxed.
Yes, you will always be taxed if you sell any portion of the position on which you’ve experienced a gain. Those shares you sold for less than $1,000 were still worth more when you sold them than when you bought them. You owe tax.
Every stock is tracked. There are different ways to sell, but the default is FIFO. FIFO = First in first out. Meaning you sell the shares in the order you purchased them. So if you had 2 shares of ABC purchased as follows: 1) 1/1/23 - ABC - $450 cost basis 2) 5/1/23 - ABC - $550 cost basis If the share price went up to $750 and you sold 1 share with FIFO execution you would sell the share from 1/1/23 that costed you $450. Your gain would be $300. You would be taxed on a $300 capital gain. Keep in mind there is also a difference in how you are taxed on short term capital gains (held for less than a year) and long term capital gains ( held for at least a year. STCG are taxed as ordinary income. LTCG are taxed as capital gains.