A capital gain results when a capital asset is sold for an amount that exceeds the item’s purchase price. If the asset sells for less than the purchase price, then it is a capital loss. If an asset is held for longer than one year before being sold, it results in a long-term capital gain. The profit from the sale of an asset held for one year or less is a short-term capital gain.
The amount by which your net long-term capital gain is greater than your net short-term capital loss for the year is your net capital gain. Your net capital gain is typically taxed at a rate lower than 15%. Net capital gain on collectibles and the taxable portion of a gain on qualified small business stock are taxed at 28%. The portion of a net capital gain on real property that must be recaptured in excess of straight-line depreciation can be taxed at rates up to 25%.
If your net capital losses are greater than your net capital gains, the losses can only be claimed up to $3,000 ($1,500 for married filing separately). Loss in excess of this amount can be carried over to following years.
Claim up to $26,000 per W2 Employee
- Billions of dollars in funding available
- Funds are available to U.S. Businesses NOW
- This is not a loan. These tax credits do not need to be repaid
Report capital gains and losses to the IRS on Form 1040, Schedule D.
1. IRS – Topic 409 Capital Gains and Losses