83(b) and long term capital gain
You should apply for 83(b) within 30 days. 10 months is too late, sorry.
"Appreciation of a Capital Asset is a Capital Gain.   In the United States, Capital Gains get favorable tax treatment after being held for 12 months. From the IRS newsroom: Capital gains and losses are   classified as long-term or short-term,   depending on how long you hold the   property before you sell it. If you   hold it more than one year, your   capital gain or loss is long-term. If   you hold it one year or less, your   capital gain or loss is short-term. The tax rates that apply to net   capital gain are generally lower than   the tax rates that apply to other   income. For 2009, the maximum capital   gains rate for most people is15%. For   lower-income individuals, the rate may   be 0% on some or all of the net   capital gain. Special types of net   capital gain can be taxed at 25% or   28%. The IRS defines a Capital Asset as ""most property you own"" with a list of exclusions found in Schedule D Instructions.  None of the exclusions listed relate to Bond ETFs." Capital gain distribution is not capital gain on sale of stock. If you have stock sales (Schedule D) you should be filing 1040, not 1040A. Capital gain distributions are distributions from mutual funds/ETFs that are attributed to capital gains of the funds (you may not have actually received the distribution, but you still may have gain attributed to you). It is reported on 1099-DIV, and if it is 0 - then you don't have any. If you sold a stock, your broker should have given you 1099-B (which is not the same as 1099-DIV, but may be consolidated by your broker into one large PDF and not provided separately). On 1099-B the sales proceeds are recorded, and if you purchased the stock after 2011 - the cost basis is also recorded. The difference between the proceeds and the cost basis is your gain (or loss, if it is negative). Fees are added to cost basis. "Bottom line is this: there's no ""short term capital gains tax"" in the US. There's only long term capital gains tax, which is lower than the regular (aka ordinary) tax rates. Short term capital gains are taxed using the ordinary tax rates, depending on your bracket. So if you're in the 25% bracket - your short term gains are taxed at 25%. You're describing two options: For the case #1 you'll pay 25% tax (your marginal rate) + 10% penalty (flat rate), total 35%. For the case #2 you'll pay 25% tax (your marginal rate) + 0% penalty. Total 25%. Thus, by withdrawing from IRA you'll be 10% worse than by realizing capital gains. In addition, if you need $10K - taking it from IRA will make the whole amount taxable. While realizing capital gains from a taxable account will make only the gains taxable, the original investment amount is yours and had been taxed before. So not only there's a 10% difference in the tax rate, there's also a significant difference in the amount being taxed. Thus, withdrawing from IRA is generally not a good idea, and you will never be better off with withdrawing from IRA than with cashing out taxable investments (from tax perspective). That's by design." "This answer is about the USA. Each time you sell a security (a stock or a bond) or some other asset, you are expected to pay tax on the net gain. It doesn't matter whether you use a broker or mutual fund to make the sale. You still owe the tax. Net capital gain is defined this way: Gross sale prices less (broker fees for selling + cost of buying the asset) The cost of buying the asset is called the ""basis price.""  You, or your broker, needs to keep track of the basis price for each share. This is easy when you're just getting started investing. It stays easy if you're careful about your record keeping.  You owe the capital gains tax whenever you sell an asset, whether or not you reinvest the proceeds in something else. If your capital gains are modest, you can pay all the taxes at the end of the year. If they are larger -- for example if they exceed your wage earnings -- you should pay quarterly estimated tax. The tax authorities ding you for a penalty if you wait to pay five- or six-figure tax bills without paying quarterly estimates.  You pay NET capital gains tax. If one asset loses money and another makes money, you pay on your gains minus your losses. If you have more losses than gains in a particular year, you can carry forward up to $3,000 (I think). You can't carry forward tens of thousands in capital losses.  Long term and short term gains are treated separately. IRS Schedule B has places to plug in all those numbers, and the tax programs (Turbo etc) do too. Dividend payments are also taxable when they are paid. Those aren't capital gains. They go on Schedule D along with interest payments. The same is true for a mutual fund. If the fund has Ford shares in it, and Ford pays $0.70 per share in March, that's a dividend payment. If the fund managers decide to sell Ford and buy Tesla in June,  the selling of Ford shares will be a cap-gains taxable event for you.  The good news: the mutual fund managers send you a statement sometime in February or March of each year telling what you should put on your tax forms.  This is great. They add it all up for you. They give you a nice consolidated tax statement covering everything: dividends, their buying and selling activity on your behalf, and any selling they did when you withdrew money from the fund for any purpose.   Some investment accounts like 401(k) accounts are tax free. You don't pay any tax on those accounts -- capital gains, dividends, interest -- until you withdraw the money to live on after you retire. Then that money is taxed as if it were wage income. If you want an easy and fairly reliable way to invest, and don't want to do a lot of tax-form scrambling, choose a couple of different mutual funds, put money into them, and leave it there. They'll send you consolidated tax statements once a year. Download them into your tax program and you're done. You mentioned ""riding out bad times in cash.""  No, no, NOT a good idea. That investment strategy almost guarantees you will sell when the market is going down and buy when it's going up. That's ""sell low, buy high."" It's a loser. Not even Warren Buffett can call the top of the market and the bottom.  Ned Johnson (Fidelity's founder) DEFINITELY can't." "A nondividend distribution is typically a return of capital; in other words, you're getting money back that you've contributed previously (and thus would have been taxed upon in previous years when those funds were first remunerated to you). Nondividend distributions are nontaxable, so they do not represent income from capital gains, but do effect your cost basis when determining the capital gain/loss once that capital gain/loss is realized. As an example, publicly-traded real estate investment trusts (REITs) generally distribute a return of capital back to shareholders throughout the year as a nondividend distribution. This is a return of a portion of the shareholder's original capital investment, not a share of the REITs profits, so it is simply getting a portion of your original investment back, and thus, is not income being received (I like to refer to it as ""new income"" to differentiate). However, the return of capital does change the cost basis of the original investment, so if one were to then sell the shares of the REIT (in this example), the basis of the original investment has to be adjusted by the nondividend distributions received over the course of ownership (in other words, the cost basis will be reduced when the shares are sold). I'm wondering if the OP could give us some additional information about his/her S-Corp. What type of business is it? In the course of its business and trade activity, does it buy and sell securities (stocks, etc.)? Does it sell assets or business property? Does it own interests in other corporations or partnerships (sales of those interests are one form of capital gain). Long-term capital gains are taxed at rates lower than ordinary income, but the IRS has very specific rules as to what constitutes a capital gain (loss). I hate to answer a question with a question, but we need a little more information before we can weigh-in on whether you have actual capital gains or losses in the course of your S-Corporation trade." If the check is written as a check to BigCo, it is less clear how Jack can compensate himself for the equity sale. It is as if the equity was owned by the corporation, not by Jack. This is correct.  If the check is written to BigCo, then it is BigCo issuing new shares.  Jack doesn't compensate himself for the equity sale, as he didn't sell anything.  The company traded shares for money which it uses for expansion.  In the long term, the capital gain from expansion may exceed the value of a $200,000 no-interest loan to the company.   If the value of the company before investing $250,000 is $1 million, then the value after investing is $1.25 million.  So $250,000 is 20% of the value of the company.  BigCo should not give the buyer 25% of BigCo but only 20% in that example.  If it does give 25%, the buyer is getting a $312,500 stake for only $250,000.   With the other example, Jack sells 25% of the company for $250,000 from his personal shares.  This doesn't change the assessed value of the company, just Jack's stake.  Jack then loans the company $200,000.  This also doesn't change the assessed value of the company (at least in theory).  It gains $200,000 but has an offsetting debt of $200,000.  In net, that's no change.  Assets and liabilities balance the same.   So if you know that the assessed value of the company is $1 million and that the buyer is paying $250,000 for a 25% stake at that same valuation, then you know that the check is being written to Jack.  If the check is written to BigCo, then one or more of those numbers is incorrect.   The buyer could be getting a 20% stake.  The new value of the company after the investment is $1.25 million.   Or paying $333,333.33.  The new value of the company after the investment is $1,333,333.33.   Or BigCo could only be worth $750,000 before the investment.  The new value of the company after the investment is $1 million.   Or Jack is getting screwed, selling $312,500 in stock (25%) for only $250,000.  Jack's shares drop from being worth $1 million to only $937,500.  The value of the company is $1.25 million.   Or some combination of smaller changes that balances. Long-term capital gains, as you note, get special tax treatment.  They are lower than regular income tax rates.  Short-term capital gains aren't penalized, they are just treated as regular income under the regular rates.  So, from a tax perspective, the day-trader gets by the same way as the rest of us because they are paying the same rates on the same progressive income tax scale. As I recall, the gain for ISOs is considered ordinary income, and capital losses can only negate up to $3000 of this each year.  If you exercised and held the stock, you have ordinary income to the exercise price, and cap gain above that, if you hold the stock for two years.  EDIT - as noted below, this answer works for USians who found this question, but not for the OP who is Canadian, or at least asked a question at it relates to Canada's tax code.