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Can You Assist With Question About Post-tax Profit On A Stock Purchase And Sale? |
I'm wondering how much profit I should reckon if a stock that I purchase increases in value by 20% and I am in the highest income tax rank (35%). Would I only be realizing a 7 percent gain (35% of 20%) on a short time capital gain basis? Am I calculating this correctly? If so, to realize a 20% profit,
| Answer: Let's draw up this simple. You buy one share of a stock for $100. It appreciates 20%. Your stock is now advantage $120. You sell the stock and pay capital gains of %35. $120-100= $20 (profit) X .35 = $7 $20 (profit) -$7(capital gains tax) = |
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