ELI5: How Capital Gains Taxes Work When You Sell Stocks To Pay Debt.

Content Idea: A straightforward guide to capital gains tax when selling stocks.

Analysis of User Need: In a thread about liquidating stocks to pay off debt, a user asks, "How do taxes work when selling stocks 😅?" This highlights a crucial knowledge gap for new investors who might be selling assets for the first time. The question shows a clear need for an explanation, pointing out a common source of confusion and anxiety. The topic is frequently brought up by others in the thread, confirming its relevance and the widespread lack of understanding.

Proposed Content: Create a simple, clear, and non-intimidating explanation of capital gains tax. The content should be structured as a beginner's guide.

• What it is: Explain that you are only taxed on the profit (the "gain"), not the total sale amount. This is the most common misconception.
• The Two Types: Clearly define the difference between long-term (held >1 year) and short-term (held <1 year) capital gains. Emphasize that long-term gains have a much lower tax rate.
• A Simple Example:
  • You buy 10 shares of XYZ for $100/share (Total cost: $1,000).
  • You sell all 10 shares two years later for $150/share (Total sale: $1,500).
  • Your taxable profit (long-term capital gain) is $500.
  • This $500 is what gets taxed, not the $1,500 you received.
• Key Takeaway: Address the original user's situation directly: when selling stocks to pay debt, remember to set aside a portion of the profit for taxes.

Why It Would Be Popular: This topic is highly relevant and evergreen. With the rise of retail investing through apps, millions of people own stocks but have never gone through the process of selling and dealing with the tax consequences. The content directly answers a common and stressful question, making it highly shareable and valuable. The simple, example-based format would cut through the confusing financial jargon, making it accessible and less intimidating.

Target Audience: Novice investors, typically in their 20s or 30s, who started investing through user-friendly apps but lack a formal financial education. They are now facing their first major financial decision that involves selling assets (e.g., paying off high-interest debt, saving for a down payment, or covering an emergency) and are realizing they don't understand the tax implications.