Selling Stocks - Count as Income?

Discussion in 'General Discussion' started by sunnydays, Mar 5, 2009.

  1. sunnydays

    sunnydays Newbie

    We haven't applied for A&A yet.

    I hope someone can help with this question:

    If my parents sell stocks this month before submitting the application, will the money count as income or conversion of assets (stocks to bank account)? They need extra cash to pay for Assisted Living until the VA money hopefully comes through.

  2. vetadmin

    vetadmin Administrator Staff Member

    Yes, you would have to count the selling of the stocks. It would be considered an income source and cannot be omitted on the application. Rather sad that you have to sell them in order to cover expenses for their care, but you may need to wait until these funds are nearly exhausted to be under the threshold so they would qualify.

  3. sunnydays

    sunnydays Newbie

    Thanks for the quick reply.

    That's unfortunate news. The stocks are only worth $20,000 and don't put them over the asset threshold, but the problem is that they don't have enough income/money in the bank account to pay for assisted living and needed this to "get them over the hump". Too bad they didn't cash them out last December.
  4. Fit2009

    Fit2009 Sr. Member

    Only the capital gain portion counts as Income - same rules as the IRS. Therefore, depending on the basis in the stocks (what they were purchased for), there may or may not be income at the time of sale - could very well be a loss. Understand? Here is a simple example:
    Bought for $5, sold for $20 Capital Gain Income = $15
    Bought for $25, sold for $20 Capital Loss = $(5)
    Good Luck!
  5. sunnydays

    sunnydays Newbie

    Very interesting. This could be good news because since the stock market is so low now, I doubt they will have much (if any) capital gains.

    How can I confirm this? Should she just report the capital gain (if any) on the application?
  6. Fit2009

    Fit2009 Sr. Member

    you put it in the Non monthly section of the income questions - the amount of capital gain should be on the statement or it was supposed to be tracked by the buyer.
  7. mcrews

    mcrews Newbie

    there is some confusion here.
    the stocks would have to be listed as an asset. 20k
    when they are sold, they are still an asset, 20k.
    gains have to do with the IRS not with VA. just because they recieve a check that does not suddenly make it a "income". even if there was a gain, it would not be listed. what you 'paid ' for the stock does not matter to the va. the question is: what are you worth? not what did you pay?. you will create havoc if you list the sell of the asset as "income".

    Mark John Crews
  8. Fit2009

    Fit2009 Sr. Member

    I believe if there was a gain, the gain portion does need to be listed as income in the non-monthly section - same as any other one time windfall. After the amount of gain, put a comma and write"One time gain from sale of stock, all assets now liquidated and listed in asset section" Do not underestimate your annual income, the do regularly check with the IRS on non-monthly income as well as monthly.
  9. Very good answers here by the previous 2 people. And both are correct in their own way.
    The sale of securities for profit is indeed considered income. You will be taxed either your income bracket for that year or 15% for long term gains (more than 1 year).
    For VA purposes it is considered income because they run financial checks with and by, the government's financial know-it-all, the IRS, who in their eyes deem it is income. However, on the application just report that it was a sale and a one time occurance. The VA will see it as a "cash asset" upon you informing them that. So both are correct, for Federal Government Purposes it is income but telling the VA what this is, they will treat as asset, because it is not a recurring monthly income, which is the main concern to the VA.

    Now here is another question are these stocks is qualified or not qualified money?
  10. swainlaw

    swainlaw Newbie

    The VA application is only concerned about income as of the date of the application and into the future. Any income prior to the application is not a factor.

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