Name ___________________________
Date ____________________
The Tax Benefits of Holding on to
Stocks
In the U.S. if you hold on to a stock for over 12
months, the amount you earn on the stock is
subject to a discounted tax rate. This is referred
to as a capital gains tax rate. In the most
commonly filed tax bracket the rate of tax that
you pay decreases from 25% to 15%, if you
hold the stock for greater than 1 year.
For example: Assume that you are in the 25% tax
bracket. You buy 400 shares of XYZ Corp. at $13.84.
The current trading sale price is at $19.74.
Total purchase price = 400 x $13.84 = $5,536.00
Total sale price = 400 x $19.74 = $7,896.00
Total profit = $7,896.00 - $5,536.00 = $2,360
Taxes on profit (normal rate) = $2,360.00 x 0.25 = $590
Taxes on profit (capital gain rate) = $2,360.00 x 0.15 = $354
Holding stock for 1 year provides $186 dollars more.
Directions: Calculate the amount of extra money you
would have earned by holding on to the following stocks
for greater than a year. Assume that you are in the 25%
tax bracket for all cases.
1. 600 shares of Apple bought at $83.62 a share. You sold
those shares at $235.93 a share.
2. 1,500 shares of Verizon Wireless bought at $24.91 a
share. You sold those shares at $42.67 a share.
3. 14,500 shares of Google bought at $174.52 a share.
You sold those shares at $289.34 a share.
© This stock market worksheet is from www.teach-nology.com
Name ___________________________
Date ____________________
Answer Key
1. $9,138.60
2. $2,664.00
3. $166,489.00
© This stock market worksheet is from www.teach-nology.com