Series 52: 6.3.4.1. Short- Vs. Long-Term Capital Gains

6.3.4.1. Short- vs. Long-Term Capital Gains

When an investor holds a security for one year or less, the IRS will consider the gain/loss to be short-term, and when the investor holds the security for over one year, the IRS will consider the gain/loss to be long-term. Short-term capital gains are taxed at the taxpayer’s ordinary income rate, while long-term gains are taxed at the lower capital gains rate (0% to 20%).

According to the IRS, the holding period clock begins the day after the investment is purchased and ends on the day the investment is sold. The date of purc