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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