Holding Period of Capital Assets
The holding period of capital assets -- that is the amount of time a taxpayer maintains ownership of the asset before selling or exchanging it -- can have an impact on taxes.
Whether a sale of a capital asset generates a long- or short-term capital gain depends on the length of time the asset sold has been held by a taxpayer. Under current law the short-term holding period is one year or less and the long-term period is more than one year. Start counting the holding period the day after the property is acquired and continue through the date of sale. Use the trade date as the disposition date for the sale of stocks and bonds.
Special Holding Period Rules:
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If a taxpayer acquires an asset in exchange for another and the basis of the new asset is dependent on the basis of the old, the holding period of the new property includes the holding period of the old.
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For dispositions prior to 2018, patent property is generally deemed to have been held long-term, no matter how long the taxpayer held it.
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Inherited property is generally considered held long-term regardless of how long either the decedent or heir owns it.,
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Acquired by gift and basis is donor’s basis holding period includes the donor's holding period (Pub 544).
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The holding period of repossessed property includes the time the taxpayer held it before original sale plus the time owned after repossession.
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Non-business bad debts are always short-term.
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Worthless stock is treated as if sold on the last day of the tax year, and accordingly will be either long- or short-term depending when it was acquired.
Caution
Capital gains are included in investment income and are subject to the 3.8% surtax on net investment income unless derived from a non -passive trade or business.