[almart222]

How is the tax calculated on 'profit' from investments if there are many deposit dates and many different investments over a few years. When purchasing stocks, how is the allocation of the deposits used to buy these stocks. E.g.. $5,000 deposited in 2008, $5000 deposited in 2009, $5000 deposited in 2010. When I buy stocks in 2011, which pool of cash is used for the transaction? This is important because surely the 'profits are tied 'date wise' to the date of the cash deposit. Any help would be appreciated, am I missing something here?

[AtlantaTaxExpert]

The "date of deposit" is irrelevant. What matters in determining taxation of stock investments is when the stock is purchased and when it is sold.

Each individual stock transcation must be accounted for and possibly individually reported. That is why Schedule D-1 is used and can extend to OVER 2,000 transactions.

[ebaines]

The question title mentions a Roth, so I assume the OP is asking about gains in a Roth IRA. If you hold the Roth for the minimum required period of 5 years then there are no taxes payable on any of the gains in the account. So no need to worry about tracking what was bought when. If the account is a regular IRA all you need to keep track of is the total amount of after-tax money you've put in over the years - again, no need to worry about the history of buying and selling within the account.

For taxable accounts (such as stock brokerage accounts or mutual funds) you do indeed have to keep track of the dates and amounts of all purchases and sales of stocks, as ATE said. Most brokerages these days keep track of all that for you, and send an accounting along with the 1099B form at tax time.

[AtlantaTaxExpert]

ebaines:

Good catch on the Roth title; I was concentrating so much on the body of the message that I missed the Roth IRA implications.