US: Basics of taxation of stocks
E.g. I buy 1 stock unit for $100.00 and sell it later for $150.00 => income taxes arise. Correct. You pay tax on your gains, i.e.: the different between net proceeds and gross costs (proceeds sans fees, acquisition costs including fees). I buy 1 stock unit for $150.00 and sell it later for $100.00 => no income taxes here. Not correct. The loss is deductible from other capital gains, and if no other capital gains - from your income (up to $3000 a year, until exhausted). Also, there are two different tax rate sets for capital gains: short term (holding up to 1 year) and long term (more than that). Short term capital gains tax matches ordinary income brackets, whereas long term capital gains tax brackets are much lower.
"A 100% stock dividend means that you get one share of the ""stock dividend"" for every share you own. For example, Google did this in 2014 when they gave all of their Class A shareholders one class C share for every Class A that they owned. If the 100% stock dividend is for the exactly the same stock, it is basically the same as a 2-for-1 stock split. If, however, the 100% stock dividend is to give you a different stock, then this is typically due to a corporate reorganization or demerger/spinoff event. Some countries have different tax treatments for the events - for example, with demergers in Australia, Class Rulings need to be obtained from the Australian Taxation Office to declare demergers as tax free.  A recent demerger was in Australia as South32, demerged from BHP Billiton. References: http://economix.blogs.nytimes.com/2014/04/02/the-many-classes-of-google-stock/ http://www.bhpbilliton.com/investors/shareholderinfo/demerger-taxation-information" "That's fortunately a lie that government public schools taught us. There's no factual basis to it.  [Myth of the robber barons](http://mises.org/daily/2317)  Rockefeller had nearly 90% of market share in oil while over a 20 year period Standard Oil lowered the price of oil from 58c/gal to just 8c. You see, in a market, you can only gain a ""monopoly"" by giving the customers the most value. Government is a monopoly who uses coercive theft (taxation) to finance its services and sees taxpayers as an unlimited ATM.  Correct, the risk of *other governments* is what makes us think we need our own government. However, the huge losses of production from diverting resources to a military that spends more than the next **25 countries combined**, as ours does, prevent the development of competing security and paramilitary groups, such as Blackwater. Military and police, afterall, are just individuals being paid to protect someone's property.  We have MUCH, MUCH less control over the govt than we do corporations. Notice you have 100% control over which company you buy from? You have 0% control over whether the govt takes money from you. Having a 1 in x,000,000 vote is basically 0.00000x% say in your own spending of the tax money. When you buy a product from a company, you have 100% say in your own spending.  The contrast is day and night. You have complete control over a corporation. If AT&amp;T gained the power to tax you to force you to buy their product, and only let you vote every few years on which one of 2 CEOs they have to spend the 30% of your money they take from you, you might start to see my point here." "The current tax regime?  Not sure if you are being serious or facetious, but:  [US Citizens and Resident Aliens Abroad - Filing Requirements](https://www.irs.gov/individuals/international-taxpayers/us-citizens-and-resident-aliens-abroad-filing-requirements)  &gt;If you are a U.S. citizen or resident alien living or traveling outside the United States, **you generally are required to file income tax returns, estate tax returns, and gift tax returns and pay estimated tax in the same way as those residing in the United States.**  In contrast, corporations don't pay taxes on profits earned abroad until repatriation [here](http://money.cnn.com/2014/08/14/news/economy/corporate-taxes-inversion/index.html), [here](https://www.nytimes.com/2017/03/09/business/economy/corporate-tax-report.html), [here](https://www.bloomberg.com/graphics/2016-apple-profits/).  So guess what they NEVER do?  This is why literally every large US multi-national corporate ""person"" pays next to nothing in taxes.  It is quite obvious that this is a violation of the spirit if not the letter of tax law.    That simple fix would wipe out massive amounts of government debt and force multi-national corporations and their shareholders to become engaged stake holders in the efficiency of government.  But if, unlike W-2 paid human counterparts, you can dodge all taxation, ""Who cares if the government is using funds efficiently?""  That is incentive to actually game the system to force the government into wasteful spending because the subsequent fallout of increased taxation and/or failure of the state can be dodged without consequence." Yea read a few books or watch some videos on YouTube on fundamental analysis and try it using excel. It's probably not what you'll be doing if you get a degree in finance, and you might even end up in accounting like I did, but its a good place to start to see if you like it or not.  It also exposes you to accounting, business, the politics of business, taxation, financial statements, EDGAR and all the other interesting and important stuff.  You might want to pick up a study guide for the CPA exam BEC. Lots of very interesting stuff in there about business in general including how the board of directors works, and taxation. It's an awesome read. If so, are there ways to reduce the amount of taxes owed? Given that it's currently December, I suppose I could sell half of what I want now, and the other half in January and it would split the tax burden over 2 years instead, but beyond that, are there any strategies for tax reduction in this scenario? One possibility is to also sell stocks that have gone down since you bought them.  Of course, you would only do this if you have changed your mind about the stock's prospects since you bought it -- that is, it has gone down and you no longer think it will go up enough to be worth holding it.  When you sell stocks, any losses you take can offset any gains, so if you sell one stock for a gain of $10,000 and another for a loss of $5,000, you will only be taxed on your net gain of $5,000. Even if you think your down stock could go back up, you could sell it to realize the loss, and then buy it back later at the lower price (as long as you're not worried it will go up in the meantime).  However, you need to wait at least 30 days before rebuying the stock to avoid wash sale rules.  This practice is known as tax loss harvesting. "In a nutshell - Value Added Tax. America, as usual, discovers what others have known and used for years. The idea of not taxing income that's tied to it is ridiculous. If you're only taxing spending but not income, people will just take spending elsewhere (Canada, Mexico, further away), and the economy will go down the drain. That's similar to the way people avoid paying sales tax now, except that it will be in orders of magnitude. Why should a corporation by office supplies in the US, if it has a branch in China? Edit Also, Fair Tax doesn't take into account moving money overseas. I've mentioned living elsewhere down below, and that also got me thinking of how I personally would certainly gain from that ridiculous thing called ""Fair Tax"". Basically, that's exactly how the ""rich folks"", those who push for it, will gain from it. Being able to move money out of the US basically makes it a perfect tax shelter. You don't pay taxes on the income (that you have in the US), and you don't pay taxes on the spendings (that you have elsewhere, because in that country income is taxable so you only pay VAT or sales taxes). This means that all the wealthy people, while investing and gaining money from the American economy (stocks, property, etc), will actually not be spending it in the US. Thus, no taxes paid to the US, dollars flowing out. Perfect. Actually, I should be all for this stupid idea. Very fair to me, no need to pay any taxes at all, because food will probably be exempt anyway." The top long-term capital gains tax rate will rise to 20% effective 1 Jan, 2011, unless Congress decides to do something about it before then. (Will they? Who knows!! There's been talk about it, but, well, it's Congress. They don't even know what they're going to do.)  Anyway. The rules about when you can sell stock are mostly concerned with when you can realize a capital loss: if you sell a stock at a loss and then re-buy it for tax purposes within 30 days, it's a wash sale and not eligible for a deduction. However, I don't believe this applies to any stocks once you realize a gain - once you've realized the gain and paid your tax for it, it's all yours, locked in at whatever rate. Your replacement stock will be subject to short-term capital gains for the next year afterwards, and you might need to be careful with identifying the holding period on different lots of your stock, but I don't believe there will be any particular trouble. Please do not rely entirely on my advice and consult also with your tax preparer or lawyer. :) And the IRS documentation: Special Addendum for Nov/Dec 2012! Spoiler alert! Congress did indeed act:   they extended the rates, but only temporarily, so now we're looking at   tax hikes starting in 2013 instead, only the new top rate++ will be something   like 23.8% on account of an extra 3.8% medicare tax on passive earnings (brought to you via Obamacare   legislation). But the year and the rates' specifics aside, same thing   still applies. And the Republican house and Democratic senate/President are still duking it out. Have fun. ++ 3.8% surtax applies to the lesser of (a) net investment income (b) income over $200,000 ($250k if married). 20% tax rate applies to people in the 15% income tax bracket for ordinary income or higher. Additional tax discounts for property held over 5 years may be available. Consult tax law and your favorite tax professional and prepare to be confused. You have a misunderstanding about what it is. Absent differential tax treatment buybacks and dividens are the exact same. period. You're saying it yourself, not buying back stock so they can pay out dividends. What the impetus might be is irrelevant. Dividends are a use of funds competing equally with investments or higher salary.