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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. Conversely, a capital loss arises if the proceeds from the sale of a capital asset are less than the purchase price.
Taxation of capital gain
Exemptions and opinions on exemptions
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".
Capital gain in national income accounting
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.
- 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.
- Moore, Stephen (2008). "Capital Gains Taxes". In David R. Henderson (ed.). Concise Encyclopedia of Economics (2nd ed.). Indianapolis: Library of Economics and Liberty. ISBN 978-0865976658. OCLC 237794267.
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