l understand, if you buy a stock, sell it within 12 months and earn cash (because stock price went up), you pay hefty tax (around 35%). But if you sell it after 12 months, you pay much less tax (around 15%). Now my question is, if l sell within 12 months and earn cash (because stock price went up), and invest the same earned amount to the same company stock (after few days, when price is down again), would that be counted as long term investment (15% tax)?

Look up rules for wash sales.

If you sell in less than 12 months you pay tax at your ordinary income rate. If you sell in more than 12 months you pay 15% or less. If you sell and buy the stock again within 30 days it is called a wash sale and you get cleaned out.

A long term gain is often taxed at a lower bracket, but if u r in the zero bracket because of a very low income, there is no tax anyway.

If u r in the 35% bracket, then ur long-term capital gains r subject to a smaller tax rate.

If u sell it at a profit & buy it back at a lower price, u pay the tax, but if u sell it at a loss, then buy it back in 30 days or less, it is called a wash sale & u cannot take a tax loss until u finally dispose of it & do not buy it back for over 30 days..

If u buy a stock & it goes up, & u sell it less than a year, u have a short term capital gain, which is added to ur income & taxed at ur normal income tax rate. (This could be anywhere from 0% to 35%, depending on ur income).

If u sell it after 12 months, if u pay long term capital gains, which can be 15% (that is the most it could be).

If u sell it less than a year, u pay short term capital gains (if it went up). If u then invest money in the same stock, u would need to hold that stock for a year before selling it for long term capital gain. You r not taxed on the gain of stock until u sell it.

You r going to have to pay taxes on the gain at ur regular tax rate because u did not hold it long term.

l found this in one of my tax textbooks:

A wash sale occurs when a taxpayer sells or trades stock or securities at a loss and, within 30 days before or after the sale, acquires substantially identical stock or securities. The purpose of the wash sale rules is to prevent taxpayers from selling & then purchasing essentially identical stock for the sole purpose of creating a deductible loss. Gain on a wash sale is taxable as usual. Loss on a wash sale is not currently deductible.

You must wait more than 30days to reinvest in the same stock. It is a wash sale.