If I purchased stock that has gone up, and I sell enough shares to cover my cost basis within a year, how will the proceeds be taxed?

[sinfonik]

Example: I purchased 100 shares of XYZ for $1 each, and after 6 months they've increased in value to $2 so I sell 50 shares for a total of $100, how will that $100 be taxed?

[VolvoGirl]

You enter a Sell Transaction for 50 shares $100 and enter the cost of those 50 shares of $50.  So you will have a taxable gain of $50.  You will have 50 shares remaining still at a cost of $1 each.  It goes by the actual shares sold.  

If you had the shares for 1 year or longer it is a Long Term Capital Gain and taxed at a lower rate.  If you sold them less than a year it is a Short Term sake and taxed at your ordinary income rate.