Editorial Type:
Article Category: Research Article
| Online Publication Date: 01 Jan 2006
The Built-in Capital Gains Tax Liability for Common Stock: The Importance of the Holding Period Assumption
The Built-in Capital Gains Tax Liability for Common Stock: The Importance of the Holding Period Assumption
CFA
Page Range: 100 – 107
While calculating the built-in capital gains tax liability associated with holding common stock investments has been quite controversial, in fact, it is very straightforward. The key is to realize that the assumption of a holding period automatically creates a liability equal to the government's right to participate in a portion of the stocks' dividends and appreciation during the holding period.Abstract
Copyright: © 2006 American Society of Appraisers
Contributor Notes
M. Mark Lee, CFA, is a principal with Eisner, LLP, 750 3rd Avenue, New York City, New York, 10017.
1. The author would like to thank Roger Grabowski, Gilbert Matthews, Shannon Pratt and Edward Impastato for reviewing prior versions of this article.