How to calculate and report capital gains

Switches between corporate-class mutual funds are no longer tax-deferred.

Matthew Elder 6 April, 2018 | 5:00PM

Much of what made 2017 a profitable year for equity investors came from capital gains. While a healthy dividend is an attractive feature in a stock, it's the increase in value that makes the big money -- which was the case in 2017. As some stocks, mutual funds and exchange-traded funds soared to double-digit gains, many investors took their profits. As always, a portion of those winnings must be shared with the government through capital-gains taxation.

Fortunately, the tax knife doesn't cut as deeply into capital gains as it does for most other types of income. Only one-half of gains realized on the sale of a security or other capital asset is taxable.

Capital gains are subject to tax only when they are realized -- when a capital asset is actually sold. So-called paper gains -- such as when a stock or fund you own is worth more than what you paid for it -- are not included in your income. A capital gain must be reported on your tax return for the year in which it was realized.

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Matthew Elder

Matthew Elder  

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