Taxation of Investments

This section of Fairmark.com explains tax rules and strategies for investments other than those that are shielded from taxation in retirement accounts or other special-purpose accounts. It currently includes three guides.

Capital Gains and Losses

This guide is in three sections:

  • Capital gains in general
    Explains the basic rules for capital gains and losses, and answers questions such as what is the last day to sell shares of stock if you want to claim a loss in the current year.
  • Basis of assets
    You need to know the basis of stock or other assets to determine how much gain or loss to report when selling. There are special rules for various transactions, from stock splits to gifts.
  • The wash sale rule
    This rule prevents you from claiming a deduction when you buy replacement shares within 30 days before or after selling stock at a loss. We devote an entire section of this guide to this surprisingly complex rule.

Mutual Fund Tax Guide

This guide is in three sections:

  • Overview
    Key concepts in taxation of mutual funds.
  • Mutual fund dividends
    Dividends from mutual funds are more complicated than ordinary stock dividends, with special categories such as capital gain dividends and exempt interest dividends.
  • Selling mutual fund shares
    Sales of mutual fund shares are subject to a number of special tax rules that don’t apply when selling regular stocks.

Tax Guide for Traders

If you’re consistently very active in short-term buying and selling, you may be treated as a trader¬†for tax purposes, with a number of favorable tax consequences.