Originally Posted by samsteeley
#1;Should I owe tax on the total value of the transaction or only the gain?
#2;For more information;
I sold stock in a mutual fund held in a taxable account and used the money for my 2011 roth IRA contribution.
#1;Only the gain, NOT on the total value of the transaction(since you have your return of investment that is not taxable). Capital gains are taxes that you pay on profit as a result of selling an asset.
#2;as you can see, R- IRA contributions are not taxed at the time you contribute the funds to your R- IRA. However, your contributions come from post-tax income. You pay taxes on your income today, but not in the future