Taxable Event

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DEFINITION

Any event or transaction that results in a tax consequence for the party who executes the event. Common examples of taxable events for investors include receiving interest and dividends, selling securities for a gain and exercising options.

INVESTOPEDIA EXPLAINS

Investors should focus on limiting their taxable events, or at least minimizing high tax rate events while maximizing low tax rate ones.

Holding on to profitable stocks for more than a year (to eliminate short-term capital gains) is one of the easiest ways to minimize the effects of taxable events.


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