Capital Gains
Capital gains refer to the profits made from the sale of an asset, such as stocks, bonds, real estate, or other investments. When an asset is sold for more than its purchase price, the difference between the two is considered a capital gain. Capital gains are taxed differently than regular income, and the rate of taxation depends on the type of asset and the length of time it was held.
History of Capital Gains
The concept of capital gains has been around since the early days of taxation. In the United States, the first capital gains tax was introduced in the Revenue Act of 1913. Since then, the taxation of capital gains has been a contentious issue, with the tax rate fluctuating over the years. In the 1980s, the capital gains tax rate was lowered significantly, and it has remained relatively low since then.
Comparison of Capital Gains Tax Rates
| Type of Asset | Holding Period | Tax Rate |
|---|---|---|
| Stocks | Less than 1 year | Ordinary Income Tax Rate |
| Stocks | More than 1 year | 0-20% |
| Real Estate | Less than 1 year | Ordinary Income Tax Rate |
| Real Estate | More than 1 year | 0-15% |
Summary
Capital gains refer to the profits made from the sale of an asset, such as stocks, bonds, real estate, or other investments. The taxation of capital gains has been a contentious issue, with the tax rate fluctuating over the years. The rate of taxation depends on the type of asset and the length of time it was held. For more information on capital gains, visit the Internal Revenue Service website or consult a financial advisor.
See Also
- Capital Losses
- Taxable Income
- Tax Brackets
- Tax Deduction
- Tax Credit
- Tax Exemption
- Tax Evasion
- Tax Avoidance
- Tax Shelters
- Tax Havens
