Holding Periods
Chapters in this video
- 0:00 The T+1 baseline for regular stock purchases
- 1:08 Carla's March 15 purchase: when long-term begins
- 2:19 Inherited securities are always long-term
- 3:28 Gifted securities: gains tack on, losses reset
- 4:32 Conversions vs. exercises: shape-shifters vs. new spawns
- 5:18 Stock dividends and the convertible bond example
- 6:05 Rapid-fire exam recap
What this video covers
- Why the holding period starts on trade date plus one (T+1), includes the day of disposition, and ignores the settlement date
- Why inherited securities are always long-term, regardless of how long the decedent held them or how quickly the beneficiary sells
- How gifted securities split into two rules: sold at a gain tacks on the donor's holding period, sold at a loss resets to the date of the gift
- Why conversions of bonds or preferred stock into common stock tack on the original holding period (shape-shifters, same investment)
- Why exercising stock rights starts a brand-new holding period on the exercise date (a new purchase, not a transformation)
- How stock dividends inherit the holding period of the original shares they were paid on
- The most commonly missed gift trap: "tacks on" applies only to gains, never to losses
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