Question

What's a capital gain or a capital loss?

Answer

A capital gain occurs when you sell a capital asset for more than what you paid for it.

A capital loss occurs when you sell a capital asset for less than what you paid for it. Most property is considered a capital asset, except these:

  • Inventory held for sale to customers
  • Depreciable business property
  • Real property used in a trade or business
  • Creative property like a copyright, literary work, musical, and so on
  • Accounts or notes receivable
  • Supplies used in a trade or business

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