Question

the capital gains (losses) netting process for taxpayers without 25 or 28 percent capital gains requires them to (1) net short-term gains and losses, (2) net long-term gains and losses, and (3) net the outcome of steps (1) and (2) if they are of similar sign.

Answer 1

A capital gain is an economic concept defined as the profit from the sale of an asset that has appreciated in value during the period of ownership. Assets can include tangible assets, cars, businesses, or intangible assets such as stocks.

What are capital gains?

• The term capital gain refers to the increase in value of an invested asset when it is sold.
• Simply put, a capital gain occurs when you sell an asset for more than you originally paid for it.
• Almost every type of asset you own is a capital asset, whether it's a type of investment (stocks, bonds, real estate, etc.) or purchased for personal use (furniture, boats, etc.).
• Capital gains are realized when an asset is sold at the sale price less the original purchase price. The Internal Revenue Service (IRS) taxes an individual on his gains on capital in certain circumstances.
• Profits may be short-term (one year or less) or long-term (one year or more) and must be claimed against income tax.
• Unrealized gains and losses reflect increases or decreases in investment value, but are not considered taxable capital gains.
• A capital loss occurs when the value of an investment decreases relative to the purchase price of the asset.

Learn more about capital gain

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