Trade vs. Settlement Date

When you sell securities, you don't receive the proceeds until the third business day after the date of sale. For example, proceeds from a sale on December 31, 2004, will not be received until January 5, 2005. Not to worry, as far as the IRS is concerned, a gain or loss should be reported on the return for the year in which the trade occurs, regardless of when settlement takes place. That means profits and losses taken as late as the closing bell on New Year's Eve are reported on the current year's return.