Investor Glossary-capital gainInvestor Glossary-capital gainInvestor Glossary-capital gainInvestor Glossary-capital gainInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Capital Gain

The HTML to link to this page
 

A capital gain is an increase in the value of an asset above its purchase price. Capital gains have special relevancy for Federal income taxes. The IRS considers almost everything you own a capital asset, and anytime you sell a capital asset above its "basis" - usually the purchase price - you have a capital gain. If you sell at a loss, you have a capital loss. If you've held the asset more than one year, the capital gain is long-term; if less than one year, it's a short-term capital gain. Capital gain taxes are determined by a formula that entails various nettings of short-term and long-term capital gains and losses. Further, a capital gain is only realized when a capital asset that has appreciated in value is sold; until the appreciated asset is sold, the capital gain is unrealized. That's important, because taxes aren't due until a capital gain is realized. Also note that a capital gain is taxed at a lower rate than ordinary income, and thus taxpayers prefer that any reportable profits be considered a capital gain.



Rate this capital gain definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: in escrow, wholly-owned subsidiary, risk management, phantom income, class C shares, deferred tax, minority interest, 1031 exchange, command economy, stock market close, VIX, 144a, average price per share, cancelled check, deferred revenue, 401a, 1035 exchange, EBITDA, required rate of return, debt service coverage, option premium, current ratio, margin rate, open position, limit order, reverse mortgage, FICO score, Zero Cost Collar, covered put, ex-dividend, FTSE, real GDP, liquidity ratio, LIBOR, labor relations, balance sheet, implied volatility, Key Rate Duration, irrevocable trust, diluted share, quality assurance, retained earnings, stock split, inflation, APR, ex-dividend date, dividends payable, annual return, per diem


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use