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Assume you bought two shares worth \$500 each. They’ve now double in price. If you want to withdraw \$1k you’ll sell one of the two shares right? Meaning that you’re realising the capital gains on that specific share you’re selling i.e., gains of \$1000-\$500

You don’t sell the money you sell/buy stocks.

Basically what OP is saying is buy 50 shares at total value of \$1k, those shares double and are now worth \$2k. OP wants to remove \$1k from the basis so they sell 25 stocks which is worth \$1k.

When calculating capital gains you look at the single stock and take the difference between sell vs buy.

Those 25 stocks were bought at \$500 and sold at \$1k so you would still pay tax on the gained \$500.

Only way you truly get the \$1k back that you initially invested is if you sell all of your stock.

I want to say that the first \$1k is taxable as short term capital gains (held <1yr) or long term (>1yr) and the second \$1k is a return of capital. Not an accountant or advice, but I’m fairly sure.

No you do not pay taxes on principal. But you cannot just extract only principal, you extract both principal and gains at the same time

You get taxed when you sell \$1k of your \$2k shares. \$500 will be taxed.

It’s taxable. The individual shares go up in value.

Assuming you are referring to a normal brokerage account, it is taxable

\$1000 invested (buy 100 shares at \$10)

Share price doubles to \$20: your original investment (Cost Basis \$1000) is now worth \$2000 (Market Value) --> 100% Gain

The taxable event occurs the moment you realize your gain: sell 50 shares --> (50*\$20 = \$1000) and you now have \$1000 in your account + 50 shares worth another \$1000 (\$2000 total)

your cost basis for the 50 shares was \$500 (50*\$10) and you sold for 50*\$20) --> you realized a \$500 gain which is what you pay taxes on.

How much depends on holding duration (short <1y / long >1y)

I understand now. Thanks for the comments everyone!

If you hold for at least one year the tax rate is lower

taxable

Still taxable. The taxable event is the sale