Question 1

What is the long-term capital gains tax rate in the US for stocks?

Accepted Answer

Long-term capital gains (assets held over 1 year) are taxed at 0%, 15%, or 20% depending on your taxable income. Short-term gains are taxed as ordinary income (10-37%).

Question 2

What is the best account for tax-free stock investing in the US?

Accepted Answer

A Roth IRA allows investments to grow tax-free and withdrawals in retirement are not taxed. Contributions are made with after-tax dollars, up to $7,000/year (2024). A Traditional IRA offers upfront tax deductions instead.

Question 3

How do I calculate cost basis for US stocks?

Accepted Answer

Cost basis is what you paid for shares including commissions. For multiple purchases, you can use FIFO (first-in, first-out), specific identification, or average cost. Your broker tracks this and reports it on Form 1099-B.

Question 4

What is the wash-sale rule in the US?

Accepted Answer

The wash-sale rule disallows a capital loss deduction if you buy a "substantially identical" security within 30 days before or after selling the losing position. The disallowed loss is added to the cost basis of the new shares.

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