1Capital Gains and Losses
Last Day to Sell
By Kaye A. Thomas
What's the last day you can sell your stock and still report the gain or
loss in the current year? The answer is the last trading day of the
Trade date controls
When determining what year you sold your stock, the trade date is what
matters. This is the day the transaction took place on the stock
If you contact your broker on the last trading day of the year, you can
complete a sale in the current year if your broker executes the trade
day. On major exchanges, the last trading day is December 31 unless that
falls on a weekend.
Stock market trades generally settle a few days after the trade date.
is the day shares and cash actually change hands. But the settlement
doesn't matter for purposes of determining when your sale took place. If
your trade date is in the current year and your settlement date is in
following year, the tax law says you made the sale in the current year
of the trade date).
Different rule for short sales
If you're closing a short sale, any loss you have on the closing
is treated as if it occurs on the settlement date, not the trade date.
's because delivery is generally the event that closes a short sale. If
need to report a loss from a short sale in the current year, be sure to
early enough so the transaction settles by December 31.
What about gains from short sales? A June 2002 ruling from the IRS says
constructive sale rule applies when you close a short sale at a gain.
because for the few days between the trade date (when you're treated as
having bought the replacement shares) and the settlement date (when your
short sale is actually closed) you're long and short the same stock.
means you have to report gains from short sales on the trade date, not
It's this simple: use the trade date to determine which year you have
or losses from sales of stock. When you're closing a short sale, use the
settlement date for losses but the trade date for gains.