Holding Period

 

The holding period is the length of time you own property before you sell it. If you hold property for a year or less, short-term capital gain or loss rules apply. If you hold property for more than a year, long-term capital gain or loss rules apply

For stock, the holding period:

  • Begins the day after you buy the shares, or the day after the trade date
  • Ends the day you sell the shares, or the trade date

Special rules apply if the shares you’re selling were a gift or an inheritance:

  • Gifts — Your holding period includes the time the person who gave you the shares held them. However, your basis might be the fair market value at the date of the gift. If so, your holding period of the gifted stock will begin the day after you received the gift.
  • Inheritances — Your holding period is automatically considered to be more than one year. So, when you sell the inherited stock, it’s subject to long-term capital treatment. This applies regardless of the actual holding period.

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