Played the market this year? Can you report it right on your Tax Return?
Category: Tax Law and Planning, Financial Planning
Did you buy, sell, or trade stocks in 2006? Planning on doing it in 2007? Did you remembers that you need to record each and every sale on your income tax return? Many investors expect that their end of year statement from their broker will give them everything they need to file their taxes - this is not necessarily true. Your year end statement will give you the sales price, but will not necessarily provide you with all the other key information necessary to file your return. As an investor, it is your responsibility to know the following for each and every security sold to properly reflect the transaction on your tax return:
- Name of the security
- Your cost basis (ie: what you paid for it, adjusted by splits, etc.)
- What you sold it for
- Date of sale
- Gain or Loss (sales price - adjusted cost basis)