Calculating Capital Gains and Losses
Gains and losses are calculated by subtracting what was paid for the security at purchase, plus any commissions (the cost basis) from what was received for the security at sale (proceeds). The proceeds are the money that is received from the sale minus the commission paid. The cost basis is the money paid for the security plus any commission or fees.
gains and losses = proceeds – cost basis
For example, if an investor paid $20 per share for 100 shares of XYZ and a $40 commission, the cost basis per share will be $20.40. The $40 commission on a per share basis is $0.40, so $2,040 / 100 shares = $20.40 per share. If the investor now sold all 100 shares at $25 for $2,500 with a $40 commission, the proceeds would be $2,500 – $40 commission = $2,460 net. Divided by 100 shares, the net proceeds per share would be $24.60. Therefore, the capital gain per share would be $24.60 – $20.40 = $4.20 per s