Almost any brokerage firm your approach today to sell your stock will insist on having you provide them with the cost basis (date of purchase/inheritence, cost per share, etc.) as they are also required to report sales to the IRS. Sometime in the year following sale, the broker will report top you AND the IRS the fact that you sold a security. The IRS will want to know the purchase details if you do not furnish them to the broker.
The lenght of time you held the stock between purchase date and sale date as well as the difference between what you paid for the stock and what you sell it for will determine the amount of tax you owe or the loss you can claim against ordinary income.
Sale of stock is a taxable transaction. The "profits" (if there are any) are called "Capital Gains". Capital Gains are taxed differently than the income you earn from work...
If you held the stock for one year or less, the Capital Gain is taxed the same as your other income
If you held the stock for one year and a day or more then the Capital Gains is taxed as follows
If your marginal tax bracket is 10% or 15% the Capital Gains tax rate is 0%
If your marginal tax bracket is 25%, 28% or 33% your Capital Gains tax rate is 15%
If your marginal tax bracket is 39.6% your Capital Gains tax rate is 20%
Under certain circumstances (high income) your Captial Gains could also be subject to an additional 3.8% ObamaCare Surtax
If you sell the stock at a loss, then the loss can offset other investment income or up to $3,000 of other income (any unused losses roll forward)
How do you know how much your gain is? If you haven't held the stock for too long your broker will provide the information on a Form 1099 at the end of the year. If the stock is "old" then you will have to calculate the gain yourself (or have someone do it for you). Basically you subtract the purchase price from the sale price, but don't forget to account for any commissions associated witht the purchase or sale.
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