Sales of Capital Assets Reported on Individual Income Tax Returns, 1997 - Statistical Data Included

Statistics of Income Bulletin, Summer, 2001 by Janette Wilson

Table 2 shows the distribution of short-term and long-term gains and losses by Adjusted Gross Income class for selected asset types. Corporate stock was reported by more taxpayers than any other asset category. Approximately 5.6 million taxpayers reported short-term gains or losses on corporate stock, and 7.5 million reported long-term capital gains or losses on corporate stock. These taxpayers reported approximately 37.1 million transactions with short-term gains or losses, and 24.7 million transactions with long-term gains or losses. The number of transactions per taxpayer increased with income for short-term and long-term corporate stock sales with the exception of taxpayers with negative adjusted gross income. For example, taxpayers with $1 million and over in AGI reported an average of 29.9 short-term transactions, compared to an average of 3.3 short-term stock transactions for taxpayers with AGI under $20,000. Taxpayers with negative adjusted gross income reported an average of 8.6 transactions. Taxpayers with AGI of $1 million and over accounted for approximately 32 percent of short-term gains and 43 percent of long-term gains for all capital transactions. These taxpayers accounted for an even higher percentage of long-term capital gains from corporate stock, approximately 52 percent.

Table 3 shows the month of sale for selected asset types. One highlight of this table is that it illustrates taxpayer tendency to realize capital losses in December. Losses in December were more than twice as high as in any other month, accounting for 21.5 percent of losses where dates were determinable (15.4 percent, including transactions where dates were not determinable). For sales of corporate stock, short-term and long-term losses in the month of December accounted for 18.7 percent and 19.6 percent of losses respectively (including transactions where dates were not determinable). Another noteworthy highlight is the increase in capital gains from April through October for long-term corporate stock, from $6.4 billion to $8.2 billion in May, to $10.9 billion in July, and peaking at $11.1 billion in October (see Figure B). In comparison, in the 1985 study, there was also an increase in reported gains from April to May. However, for 1985, there was a steady decline though September (see Figure C). The announcement of the May 6 effective date for the new tax law in May of 1997 may account for some of this difference [2].

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Table 4 shows the distribution of transactions by holding period for selected asset types. For 1997, 38.1 percent of transactions of all assets types were short-term, and 61.9 percent, long-term. A comparison of holding periods over time reveals that the share of short-term transactions has increased since 1985. In 1985, 25.8 percent of gain transactions were short-term and 74.2 percent long-term. This change is more pronounced for corporate stock sales, where the short-term transactions increased from 26.7 percent of stock transactions in 1985 to 55.7 percent in 1997 [2].