[intrepid]

Hello David
I have been doing trading (stocks) for last three months. I usually hold the stock for one night. I have many questions
1.At the end of the year how much tax do I have to pay if I make some money in stocks or its depend on my overall expenses.
2. How to get the div. from a company and what would be time period for holding the stock.
3. Let suppose if xyz company merge or buy the abc company, the shares of abc company becomes higher. Can you please give me little information why the shares becomes higher when these kinds of news comes out.

Thank you

[David Waring]

Hi Intrepid,

Glad to hear from you and welcome to the community. I have answered your questions below in the order received:

1.At the end of the year how much tax do I have to pay if I make some money in stocks or its depend on my overall expenses.

This depends on a number of factors including how you classify yourself, what your expenses are, whether or not you have any loss carryovers from the year before etc. Here are two good resources for learning more about taxes for traders:

GTT RESOURCES

Day Trader Taxes

2. How to get the div. from a company and what would be time period for holding the stock.

You can find a great overview of how dividends are paid out and the dates which the stock must be held in order to receive a dividend at the link below:

Invest FAQ: Stocks: Dividends

3. Let suppose if xyz company merge or buy the abc company, the shares of abc company becomes higher. Can you please give me little information why the shares becomes higher when these kinds of news comes out.

When an offer is made by one company to buy another company that is public the offer price is normally higher than where the stock is trading. There are two main reasons why this is:

1. The company that is being acquired shareholder's are much more likely to approve the deal if it means that they automatically get an increase in the value of the stock that they hold.

2. This makes it less likely that a competing offer will surface.

While it is pretty much standard to see the price for the shares of a company that is being acquired rise, what happens when two companies merge varies greatly depending on the details of the merger. If shareholders see extra benefit for one or both of the companies in the merger then the stock price will rise but if not which often times they do not, then the price of one or both of the companies can fall.

Hope that helps. Please let me know if there are any other questions.

Best Regards,
Dave