Capital Gains Taxes

The concept of capital gains and the taxes levied on them is an important one to consider if you are an investor or own any property that may grow in value. Capital gains are produced by the sale or exchange of a capital asset. A capital asset is any asset held by a taxpayer, with exceptions for assets held in the course of a trade or business and certain intellectual property. The amount of a gain or loss is the difference between the sales price and the taxpayer's adjusted basis (or cost) in the asset. Capital gains and losses must be separated according to how long the property was held. Capital gains and losses are considered short term for assets held less than one year and long term for assets held more than one year. We'll continue our discussion of capital gains taxes next week.