Capital Gain

Capital Gain

Capital Gain means:
the gain on the sale of a capital asset. A tax on profits from the sale of securities or other assets. In 1994, the maximum individual tax rate on long-term capital gains is 28%. There are limits on the deduction of capital losses against ordinary income, with none allowed for corporations and a maximum of $3,000 per year for individual tax returns. The profit from the sale of such property as stocks, mutual-fund shares and real estate. Gains from the sale of assets owned for 12 months or less are “short-term capital gains” and are taxed in his or her top tax bracket, just like salary. For most assets owned more than 12 months, profits are considered “long-term capital gains” and are taxed at 15%. Taxpayers who otherwise fall in the 10% or 15% bracket get an even better deal. Their rate on long-term gains is 0% percent for 2010, 2011 and 2012. Former IRC (check if this IRC provision is current here) § 1222(9).

Example of Capital Gain:

Learn more about tax examples, explanations and calculations here.

Collins purchases land, for investment purposes, for $10,000. Thirteen months later she sells it for $14,000. She reports the $4,000 profit as a long-term capital gain on Schedule D of her income tax return.

The special rates for long-term gains do not, however, apply to all gains from investment real estate. To the extent that the gain results from depreciation (depreciation deductions reduce his or her basis in the property and therefore increase gain dollar for dollar upon sale), a 25% rate applies (unless the taxpayer are in the 10% or 15% bracket, in which case that rate applies) to this “recaptured” depreciation. Also, long term-gains from the sale of collectibles are taxed at 28%.

See also Capital Gain in the American Legal Encyclopedia and Capital Gain in the World Legal Encyclopedia.

See the entries Income Tax and State Income Tax in the American Encyclopedia of Law.

U.S. and other Developed Countries International Tax Meaning

A gain on the sale of capital asset. See Capital Gains Tax and Capital Gains Tax.

See Tax Rate and Tax Rate.

Description and Definition of Capital Gain

The difference between the amount realized and adjusted basis on the sale or exchange of capital assets. Profit on the sale of capital assets such as stocks, mutual fund shares and real estate. Depending on your tax bracket and on how long you held a capital asset you may pay about one-third to one-half less tax on a capital gain than you would have paid on the same amount of ordinary income.

Description and Definition of Short Term Capital Gain or Loss

The profit or loss from the sale or exchange of a capital asset that you held for one year or less.


See Also

Further Reading


See Also

Further Reading






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