Report to locate Unrealized Gains

[John Ralls]

> On Feb 13, 2017, at 5:12 PM, DaveC49 <davidcousens at bigpond.com> wrote:
> 
> John, 
> 
> With regard to your side issue over the inability to deduct the commissions
> and fees from the capital gains, I suspect it is because those fees and
> commissions are already going to be deductable against your income as they
> are generally a part of the expenses of running a share trading business. 
> 
> If they were also deductible against the capital gain income specifically,
> it would amount to a double deductibility of the same expenses and most
> taxation law has as a general principle that multiple taxation (and
> deductibility) of the same amount should not occur.
> 
> Unless the fees and commissions on share trades are specifically not
> deductible against your general income under the laws in your jurisdiction,
> then this is likely to be the case. The alternative could arise where a
> capital gains tax is a separate tax from income tax and may be taxed at
> different rates. In this case one could envisage they would be specifically
> deductible against the capital gains income and not be deductible against
> general income for income tax.
> 
> For example, in Australia, our capital gains income is calculated as a
> component of our taxable and is taxed at the same rates as company tax for
> companies and the marginal tax rate for individuals and generally the fees
> and commissions are deductible, i.e. it is not a separate tax. Their are
> some exclusions for personal assets (home, car, furniture etc) and
> depreciable assets for businesses.
> 
> From what I understand of CGT in the US (limited to Wikipedia), capital
> gains income is not taxed at the same rate as ordinary income and an
> additional tax component applies above specified income thresholds, the
> additional tax rate also depending upon the length of time the asset has
> been held.

David,

I'm pretty sure we're dealing with personal taxes here and that there aren't separate capital gains taxes for a trading business unless it's a pass-through.

In the US on personal returns capital gains are taxed at a lower rate if the investment has been held for more than 1 year and the ordinary income rate otherwise. The actual rates for both long term capital gains and ordinary income depend on the so-called "adjusted gross income". 
On individual taxes one reports both the basis and proceeds net of commissions and fees (adding them to the basis and subtracting them from sales) and the difference is the reported income (or loss; if one has a net loss for the year one can deduct the first $3000, the rest are carried forward to offset future net gains.

The bit that's messing up David T and apparently a bunch of others here is that they want to both book the commission and fees as expenses and use the netted-out income amount. David T is having trouble understanding how both expensing and reducing the income by the commission and fee amounts is double-counting them. Perhaps you can explain it more clearly than I have.

Regards,
John Ralls