Tax Consequences of Securities Transactions

What this video covers

• How original basis becomes adjusted basis, and why Riley the rep cares about that final number for computing gain or loss on sale
• When FIFO applies as the default lot sale method, and the strict deadline plus written confirmation requirement for specific identification to override it
• Why the average basis method is available for mutual fund shares and dividend reinvestment plan shares acquired after December 31, 2010, and what happens when no customer election is made
• How to count the holding period starting the day after the trade date of acquisition through the trade date of disposition, and why exactly one year is still short-term
• The two conditions for qualified dividend status: domestic or qualified foreign corporation payer, plus the holding-period test of more than 60 days within the 121-day period surrounding the ex-dividend date
• How hedging with substantially similar positions destroys qualified dividend status and forces ordinary income treatment
• Why interest income from bonds and cash equivalents is taxed as ordinary income by default, with no special holding period or payer requirements to unlock preferential rates