Capital gain

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"Capital Gains" redirects here. For the radio show, see Capital Gains (radio show).

A capital gain is a profit that results from a disposition of a capital asset, such as stock, bond or real estate, where the amount realised on the disposition exceeds the purchase price. The gain is the difference between a higher selling price and a lower purchase price.[1] Conversely, a capital loss arises if the proceeds from the sale of a capital asset are less than the purchase price.

Capital gains may refer to "investment income" that arises in relation to real assets, such as property; financial assets, such as shares/stocks or bonds; and intangible assets.

Taxation of capital gain[edit]

Most countries impose a tax on capital gains of individuals or corporations.

Exemptions and opinions on exemptions[edit]

Tax relief or exemptions may be available for capital gains in relation to holdings in certain assets such as significant common stock holdings. Reasons for such exemptions are to provide incentives for entrepreneurship, to compensate for the effects of inflation, or to avoid "double taxation".[2]

Capital gain in national income accounting[edit]

Capital gains or losses are not counted during National Income accounting as they only pertain to transference of rights to shares and assets and hence do not correspond to any new production activity.

See also[edit]

References[edit]

  1. ^ Sullivan, Arthur; Steven M. Sheffrin (2003). Economics: Principles in action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. pp. 268, 508. ISBN 0-13-063085-3. 
  2. ^ http://georgewbush-whitehouse.archives.gov/news/releases/2003/01/20030107-5.html

Further reading[edit]