Welcome to Investing For Beginners podcast, this is episode 42. Andrew and I are going to do something fun tonight; we’re going to answer some reader questions.

* Correction about how to treat capital gains when selling a stock.
* What options are there to check the financials of a company before year’s end.
* Different strategies to utilize when prices fall to help protect your investments.
* Tips to find the right broker for you.

We’ve gotten some emails in the last week, or so that had some interesting questions. Andrew and I thought we would chat a little bit about those so without any further ado Andrew I’m going to turn it over to you big guy and let you start us off.
Andrew: yeah let’s catch up on some of these huh yeah okay first one person. Alan, he says “hey Andrew in the last episode 39 the question was asked when you buy stocks over time and then you sell which gets sold first, the ones you bought or later ones?
Alan says you and Dave said it didn’t matter from a profit standpoint is correct, but for calculating capital gains tax, it can mean the difference between long-term and short-term capital gains. So if I buy ten shares of stock XYZ a year and a half ago assuming long-term capital gains kicks in after one year and I bought another ten shares three months ago and today I sell ten shares will I pay short-term or long-term capital gains on the sale?
So, Alan, you’re right it does matter as far as capital gains taxes go. I mean like we mentioned in the episode there’s that cut off time of 12 months, and so if you’ve held the stock for less than 12 months, it’s short-term capital gains. Longer than that’s long-term so in essence, if you were to sell the shares that you can hold for as long then yes that would affect how much you get in at the end of the day because you’ll be getting short-term and long-term capital gains.

The way I look at it, Dave you can correct me if I’m wrong, but either the brokers going to do that for you and then if they don’t because it’s a thing right where the broker is going to give you a form while your tax implications based on your buys and sell. And then you will either take that to an accountant or if you’re doing a Turbo Tax thing whatever that may be.
But at least with my accountant, I’m usually telling him like my dollar amounts as far as how much stock I sold and then saying if it’s a long-term or short-term capital gains. I don’t know if that’s the case I’m assuming if you’re doing a Turbo Tax that’s value you will enter it manually.
So I’ll be aware of it yourself and then interact so you know if you’re buying 20 shares ten of them would be long-term ten short terms and you’re selling just the long-term capital gains. Be aware that worth to the IRS that and then if there are any discrepancies if you get audited by the IRS the trade histories all going to be there with your broker.
So if anything anybody wants to challenge what you’ve inputted it’s just the case of looking back, and it’s a simple math thing, and you’re just look looking at the difference between the dates and then looking at the activity I don’t see it being an issue, but it is good that you look.
But because there is that difference, and we didn’t clarify that an episode 39, again I’m not a tax professional. This isn’t any professional advice but for my honor for my understanding the capital gains things are things that you are self-reporting to the IRS.
And in the case of an audit, you should have the proper documentation from your broker that they sent in the mail.
Dave: Yeah,