Guide
Calculate stock profits, losses, and percentage returns including buy/sell commissions. Understand your true gain or loss before tax time and evaluate whether a trade was worthwhile.
Calculating Cost Basis and Returns
Cost basis includes the purchase price plus commissions and fees. Subtract this from sale proceeds to find your gain or loss. Percentage return = (gain / cost basis) × 100.
If you bought shares at different prices over time, use average cost basis or FIFO (first in, first out) depending on your tax situation.
Tax Implications
Holdings sold within one year trigger short-term capital gains taxed as ordinary income. Holdings held over one year qualify for lower long-term capital gains rates (0%, 15%, or 20% depending on income).
Harvest tax losses by selling losing positions to offset gains — but avoid wash sale rules by not repurchasing the same security within 30 days.
Key Takeaways
- Include commissions in cost basis for accurate returns.
- Long-term holdings get favorable tax treatment.
- Know your break-even price before selling.
- Track every trade for tax reporting.