How to Calculate the Required Sell Price
When you sell a stock, the broker may charge a commission and the IRS taxes your capital gain. A "10% target return" means you want 10% net β after all costs. Since taxes are calculated on the gain (not your total proceeds), the algebra requires solving for the sell price explicitly.
The Formula
S Γ shares Γ (1 β sell_fee β tax_rate) + buy_price Γ shares Γ tax_rate = total_cost Γ (1 + target_rate). Solving for S gives the required per-share sell price. The result is always higher than simply multiplying your buy price by (1 + target) when fees and taxes apply.
Common Fee Scenarios (US)
| Scenario | Buy Fee | Sell Fee | Tax Rate |
|---|---|---|---|
| Major discount broker (long-term) | 0% | 0% | 15% |
| Major discount broker (short-term) | 0% | 0% | 22β37% |
| Roth IRA (long-term) | 0% | 0% | 0% |
FAQ
This would mean a loss. If the calculated sell price is below your buy price, the target return requires rethinking β it may be unachievable given the current tax and fee structure.
No β only federal tax is included. Add your state rate to the federal rate for a more complete picture. California taxes capital gains at up to 13.3%.
β» Uses buy price as cost basis. Actual basis may differ if fractional shares or multiple lots are involved.