Question 1

When does the holding period start?

Accepted Answer

The day after you acquire the asset. For securities, it's the trade date (not settlement). For real estate, typically the closing date. You need to hold more than one year (366 days) for long-term treatment.

Question 2

Do I owe capital gains in retirement accounts?

Accepted Answer

No. In traditional IRAs and 401(k)s, gains are tax-deferred until withdrawal (then taxed as ordinary income). In Roth accounts, qualified withdrawals including gains are completely tax-free. Tax-advantaged accounts avoid capital gains tax.

Question 3

What is the wash sale rule?

Accepted Answer

If you sell a security at a loss and buy the same or substantially identical security within 30 days before or after, you can't claim the loss for tax purposes. The loss is added to the cost basis of the replacement shares instead. This prevents harvesting losses while maintaining positions.

Question 4

How are cryptocurrency gains taxed?

Accepted Answer

Crypto is treated as property. Each sale, trade, or use to buy goods is a taxable event. Same short-term/long-term rules apply. Tracking cost basis can be complex with multiple purchases - use FIFO, LIFO, or specific identification.

Question 5

What is the Net Investment Income Tax?

Accepted Answer

An additional 3.8% tax on investment income (including capital gains) for high earners. Applies when MAGI exceeds $200,000 (single) or $250,000 (married). This brings the top rate to 23.8% (20% + 3.8%).

Question 6

Can I offset short-term gains with long-term losses?

Accepted Answer

Yes, but there's an ordering rule. Short-term gains first offset short-term losses. Long-term gains offset long-term losses. Then net short-term and net long-term combine. This can result in using valuable long-term losses against short-term gains.

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