When does short turn to long term capital gains?

[dirtbiker]

I bought BNO on 4/20/2020 in my taxable brokerage account. I'm up over 100% (and dropping) and want to sell. I don't think the upside of oil is worth the risk any longer. I actually wanted to sell about a month ago, but didn't want to pay short term capital gains tax. My understanding is that it needs to be held over a year for it to be considered long term. However, my broker (E-trade) still has it listed as short term today on 4/21/2021. I tried calling them yesterday, but after over an hour on hold, I just had to go. Since it's now been over a year, can I sell without concern? Or should I wait until it's listed as long term on my brokerage account?

 

[disneysteve]

You need to hold for one day over a year, so that should be today, 4/21, for you. Your broker's site is showing status as of close of business yesterday. I'd probably hold until tomorrow and then sell.


I'm sure someone else will come along and confirm this.

 

[steelyman]

It might be one year from the settlement date, typically a few days after the order is filled.

 

[SecondCor521]

From the instructions for Form 8949, which flows to Schedule D:

"The holding period for short-term capital gains and losses is generally 1 year or less. ... The holding period for long-term capital gains and losses is generally more than 1 year. ... To figure the holding period, begin counting on the day after you received the property and include the day you disposed of it." (https://www.irs.gov/pub/irs-pdf/i8949.pdf)

So the way I read it, you would exclude 4/20/2020, and include 4/21/2021 in the counting if you sold today. 4/21/2020 to 4/21/2021 seems to me to be one day more than one year and thus long term, but I wouldn't rely on SGOTI for the finest interpretations of tax law.

And I'm pretty sure it's trade dates, not settlement dates, that matter.

 

[disneysteve]

It is trade date, the day you purchased the stock, not the day your broker settled the transaction.

 

[dirtbiker]

Thank you everyone. Today at noon, the status on E-trade changed from short to long. Maybe I purchased at noon a year and a day ago? Either way, I sold with a cool 101% profit. Well, now it's time to start complaining about gas prices now that I'm not profiting on it any longer! lol

 

[disneysteve]

Good job. Nothing at all shabby about a 101% gain in a year.