5.9 Counting the Months in Your Holding Period

The period of time you own a capital asset before its sale or exchange determines whether capital gain or loss is short term or long term.

These are the rules for counting the holding period:

1. A holding period is figured in months and fractions of months.
2. The beginning date of a holding month is generally the day after the asset was acquired. The same numerical date of each following month starts a new holding month regardless of the number of days in the preceding month. If you acquire an asset on the last day of a month, a holding month ends on the last day of a following calendar month, regardless of the number of days in each month.
3. The last day of the holding period is the day on which the asset is sold.
EXAMPLES
1. On September 19, 2012, you buy stock. The holding months begin on September 20, October 20, November 20, and December 20, and end on October 19, November 19, December 19, etc. A sale on or after September 20, 2013, would result in long-term gain or loss.
2. You buy stock on November 30, 2012. A holding month ends on December 31, January 31, February 28 (or 29 in a leap year), etc.
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