Understand why holding time changes capital gains taxes: test your skills
Hold an investment for more than a year and gains are usually taxed at lower long-term rates. Answer each question to see the explanation; your score appears at the end.
This test checks that you can
- Tell short-term from long-term gains
- Calculate a gain from cost basis
- Know how losses offset gains
- Practice
1. Long-term means held…
- Practice
2. Short-term gains are taxed at…
- Practice
3. Net capital losses can offset ordinary income up to…
- Key idea
4. Which statement best explains "One year and a day"?
- Key idea
5. Which statement best explains "Basis includes reinvested dividends"?
- Key idea
6. Which statement best explains "Retirement accounts avoid yearly gains tax"?
- Action plan
7. In the action plan, which step comes first?
- Mistake to avoid
8. Which of these is a mistake this lesson warns against?
- Mistake to avoid
9. Which of these is a mistake this lesson warns against?
You bought for $2,500, reinvested $300 of dividends, and sold for $3,600. What is the gain?
Show the answer
$800
Basis $2,500 + $300 = $2,800. $3,600 − $2,800 = $800.
Find the purchase date of one investment in a taxable account and note when it becomes long-term.
More tests in this bootcamp
- Read tax brackets one layer at a time
- Tell a tax credit from a tax deduction
- Compare the standard deduction with itemizing
- Check sales tax before the receipt surprises you
- Keep the receipt records that matter at tax time
- Understand why holding time changes capital gains taxes
- Understand tax-loss harvesting and the wash-sale rule
- Plan for taxes as a W-2 employee or 1099 contractor
- Keep charitable giving records and understand the tax rules
- Know when your taxes need a professional
- Final exam: Taxes