Hi. I'm new to this. I've been considering investing in stock, bonds, gold, or something for a while now. The idea has come up on and off over the years, but now I feel serious about doing it. I've seen the educational section on this forum, and think it would be great to look through it later on when I have enough time. I promise I will look through it. Right now I was just hoping someone could answer the questions that have been bouncing around in my head the past few days. 1. Do I have to pay taxes on stocks that I buy or own? Or do I only pay taxes on them when I sell them? 2. Do you think a grocery store would be a good stock purchase at this point in time? 3. Would I have to pay any money after buying stocks (not when I sell it)? Like if its value declines or some other situation?
1. You pay short-term or long-term capital gains taxes reported on Schedule D when you sell.... unless they are held in an IRA then those rules apply. You will also pay taxes on dividends received every year, unless again it is an IRA account. As you probably know IRAs are tax deferred. For a traditional IRA you will pay taxes as ordinary income on every withdraw. For a ROTH it's all yours baby, you already paid the taxes on the deposits and the earnings are tax free (until they change the rules). Taxing labor is the definition of slavery by the way and is unconstitutional. Taxing corporate activity (like earnings from buying and selling stocks) is constitutional and we should be happy to pay it. 2. Maybe. Which grocery store? 3. You would only have to pay in more to cover your margin requirements if you bought stock on margin and the price goes low enough to trigger a margin call (buying on margin = buying stock with money borrowed from your broker using your other stock as collateral). If you don't respond to a margin call then your broker will automatically sell enough of your stock to satisfy the margin call. You would also be paying margin (loan) interest. If you only buy stock with your own money then no. 3a. If you sell short (borrow stock from your broker and immediately sell it in the open market) and the company issues a dividend before you buy the stock back to return to your broker, you would have to pay the original owner of that borrowed stock his dividend. You would also pay margin (loan) interest.
