Capital Gains

When making investments in small-caps, it’s easy to focus on your risk tolerance and return goals, but don’t forget to assess your tax exposure on your winners. What’s left after taxes is really what counts. Capital gains will kick in on any profits you make from the sale of stocks where the sale price exceeds the purchase price. Keep track of the dates you make purchases, and review them prior to making a sale. Knowing your time horizons can make a difference to your wallet. Short-term gains are those holding periods of a year or less that are taxed at higher tax rates than a long-term gain (more than one year). Holding a position for a bit more time may be to your advantage. The IRS is watching your trading time horizons—are you?