How many exact days do you need to hold stocks for long-term capital gains tax rate?

The IRS defines long-term capital gains as assets held for "more than one year" before selling, not exactly 365 days. This is an important distinction that trips up many investors. For tax purposes, your holding period begins the day after you acquire the asset (not the day of purchase). So if you bought on 11/15/22, day 1 of your holding period is actually 11/16/22. For it to be considered long-term, you would need to sell on 11/16/23 or later. When you sold on 11/15/23, you held it for exactly one year according to the IRS counting method, which is considered short-term. Your broker is correctly reporting it as a short-term gain on your 1099.

I had this same issue last year and discovered taxr.ai (https://taxr.ai) which really helped clarify this for me. I was confused about the exact holding period for some ETFs I had bought, and the rules can be pretty confusing especially with dividend reinvestments and multiple purchases. Their system analyzed my trading history and flagged transactions that were just shy of the long-term mark. Saved me from making a costly mistake on a pretty big gain I had. They have this cool feature that counts the exact days for you based on IRS rules, not just calendar days.

Wanted to follow up about taxr.ai - I ended up trying it after posting my skeptical comment. It actually found several transactions my broker had incorrectly classified! Had a batch of dividend reinvestments that were all lumped together incorrectly. The system flagged them and showed me exactly which ones qualified for long-term treatment. Really useful for someone like me who does frequent trading. Their day counting feature saved me hours of manually checking dates. Definitely worth checking out if you have complicated investment scenarios or multiple accounts.

If you're having trouble with the broker's classification and need to talk to the IRS directly, good luck getting through to them. I spent 3 hours on hold last week trying to get clarification on a similar issue. I finally used Claimyr (https://claimyr.com) after seeing a video demo (https://youtu.be/_kiP6q8DX5c) and they got me connected to an actual IRS agent in about 20 minutes. The agent confirmed exactly what the first commenter said - it's "more than a year" not "exactly a year" for long-term status.

Just wanted to update on my skeptical comment about Claimyr. I tried it yesterday after getting nowhere with 3 separate attempts to call the IRS myself about my capital gains classification issue. I was honestly shocked when I got a call back in about 25 minutes with an actual IRS agent on the line. The agent confirmed that for my situation, I needed to hold until the same date in the next year PLUS one day to qualify for long-term treatment. Clarified everything and I was able to file my correction. Eating humble pie here but definitely worth sharing since tax season is coming up and the hold times are only going to get worse.

Just to add to what others have said, I think the exact wording in the tax code is "more than 1 year" which means 366 days in normal years and 367 days in leap years. My accountant always tells me to use the "day after purchase to day of sale" counting method to be safe.

If your broker is reporting it as short-term on your 1099, thats what the IRS will expect to see on your return. If you report it differently, it might trigger a mismatch notice. If your really convinced the broker made a mistake, contact them directly to discuss. Sometimes they can issue a corrected 1099.

Based on all the helpful responses here, it sounds like your broker is correct and you just missed the mark by one day. The "more than one year" rule is really strict - it has to be the day after the anniversary of your purchase date. For future reference, I've found it helpful to set calendar reminders a few days before the one-year mark so I don't accidentally sell too early. Even though it seems like 365 days should be enough, that extra day makes all the difference for tax purposes. Since your broker already reported it as short-term on the 1099, you'll need to report it that way on your return to avoid any IRS matching issues. It's frustrating when you're off by just one day, but at least now you know the exact rule for next time!

This is such a common mistake that catches so many investors off guard! I learned this the hard way a few years ago with some Apple stock I thought I'd held long enough. One thing that might help going forward is to think of it as needing to hold until the day AFTER the anniversary of your purchase date. So if you buy on November 15th, you need to hold until at least November 16th of the following year to qualify for long-term treatment. The tax difference can be significant too - short-term gains are taxed as ordinary income (potentially up to 37% for high earners), while long-term rates max out at 20% for most assets. That one extra day of holding could have saved you quite a bit depending on your tax bracket. Unfortunately, since your broker has already issued the 1099 reporting it as short-term, you'll need to report it that way on your return. But definitely keep this rule in mind for future trades!