Finance Maxxing
Capital Gains & Investments
Holding Period
How long you held an asset — determines LTCG vs. STCG.
The holding period determines whether gains are taxed as short-term or long-term.
Rules
| Situation | Holding Period |
|---|---|
| Regular purchase | Day after acquisition → sale date |
| > 12 months = LTCG | ≤ 12 months = STCG |
| Inherited assets | Always long-term (regardless of actual holding) |
| Gifted assets | Original owner's holding period + yours |
| Wash sale replacement | Original purchase date carries over |
Edge Case: "More Than" 12 Months
The rule is more than one year, not "one year or more." An asset bought on Jan 1 and sold on Jan 1 of the next year is short-term (exactly 12 months). Sold on Jan 2 = long-term.
Sources
More in Capital Gains & Investments
Long-Term Capital Gains (LTCG)
Gains on assets held over one year, taxed at preferential rates.
Short-Term Capital Gains (STCG)
Gains on assets held one year or less, taxed as ordinary income.
Net Investment Income Tax (NIIT)
3.8% surtax on investment income for high earners.
Cost Basis
Original purchase price used to calculate gain or loss.
Capital Loss Deduction
Losses offset gains; up to $3,000/yr against ordinary income.
Tax-Loss Harvesting
Selling investments at a loss to offset gains.
Wash Sale Rule
Disallows loss if you repurchase same security within 30 days.
Qualified Dividends
Dividends taxed at LTCG rates instead of ordinary rates.
Stepped-Up Basis
Inherited assets reset cost basis to date-of-death value.