Holding period -- refers to the length of time you own property before you sell it. Your holding period is either short-term or long-term for purposes of capital gain treatment. If you hold property for a year or less, the short-term capital gain or loss rules will apply. Property will qualify for long-term capital gain treatment when it is held for more than one year.
For Stock, the clock starts running the day after you purchase the shares, or the day after the trade date. And it stops running on the day you sell the shares, or the trade date. So, for example, if your trade date for purchasing the shares was March 15, 2009, then you start counting the time from March 16. Your holding period remains short-term through March 16, 2010. However, on March 17, 2010, your holding period becomes long-term.
Special rules apply if the shares you sell were given to you as a gift or you received them as an inheritance. If the shares were a gift, then your holding period includes the time they were held by the person who gave them to you. However, if the donee’s basis is the fair market value at the date of the gift, the holding period for the donee of the gifted stock will be being the day after the gift. If you inherited the shares, then your holding period is automatically deemed to be more than 1 year which will allow for capital gain treatment when the inherited stock is sold regardless of the actual holding period.