WalletHub, Financial Company
Capital gains tax is a tax imposed on the profit realized from the sale of an asset. Capital gains are realized when a person sells property or investment assets (stocks, bonds) at a price that is higher than the purchase value. For example, if you buy stock for $2,000 and sell it for $3,000, you have a $1,000 capital gain for which you must pay tax.
Dmitriy Fomichenko, President, Sense Financial
Whenever you sell a capital asset for more than its adjusted basis value, you make money on the transaction and its call capital gain. In simple words, it is the benefit you receive from selling a capital good for profit.
The IRS requires you to pay tax on this capital gain. The tax rate may vary depending upon the fact that whether it was a long-term or short-term investment. Short-term investments (held for less than a year) are taxed at a higher rate. Always refer a tax professional for more information.
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