SLOT: Trying to understand tax implications and the forms that would have to be used if I sold a few shares
If I bought some share a year before Crosstex started paying distributions again. I would be responsible for the years which they did pay a distribution and I would have to list this on my 1040 (where) and then on another IRS form that shows the capital gain that I made on the sell.
The question becomes how much income tax would I expect to pay? Whatever bracket I am in now? And, then there is the form to fill out for the capital gain. My question, is there no break given on taxing the distribution income?????
I really would like to settle some medical debts by dumping about 500 shares of XTEX, if it gets to $15.60 on the bid.
It's more complicated than you suggest. You need to use the sales schedule on the K-1 which will give you basis adjustments and ordinary income. There are other forms besides 1040 and sched D.
As a rough estimate, sum all the distributions you received and estimate the ordinary income tax liability on that total using your tax bracket. In addition figure capital gains tax rate on the difference between the purchase and sale price. One final point, it gets very complicated if you sell only part of your position. Good advice is to sell your entire position in XTEX or none of it. Don't mess with selling just part of it unless you want tax headaches.
Note that taxpackagesupport website has a tax calculator which gives you an estimate of taxes to be paid if you sold your position as of Dec 31st in the previous year. Since we just started January (and assuming the data is updated for 2012), this should be a pretty accurate estimate. You need to log into the Crosstex section of the taxpackage support website.
Agree with liza, If you don't plan on selling more than 500 shares in 2013, ( b/c you only want a small amount of your investment) a simple way to do this is sell all your shares, then buy back what you want to hold long(less your 500 you want to sell) pay the taxes imposed for selling those shares,this would be an easier in the long run as now you can start zero on capital gains and hold long until you are ready to cash out again
1. I"m not an accountant.
2. Its tough to answer your question given the partial information given.
Having said that it sounds like you bought XTEX for a buck or two in 2009. If so, then you've used up your basis with the distributions the past couple of years and should you sell you'd have to pay normal income taxes on the amount of the distributions paid that reduced your basis to zero (or whatever remains). The remainder would generally be paid as capital gains (there are exceptions).
So if you bought for $2, and have received more than $2 your basis is now zero (and hopefully you've paid capital gain taxes on any distributions over $2). When you sell at $15 you owe normal income tax on $2 and capital gains on $13 (usually).
YOu should get a special form from XTEX when you sell that helps you calculate everything.
Hope that helps you come up with a ballpark. BUT AGAIN, I AM NOT AN ACCOUNTANT.