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

Related Topics

Related Resources

Giving ‘Til it Hurts: The Annual Gift Tax Exclusion

If you are giving large gifts this year, it's important to know the IRS rules surrounding gift taxes. Learn more about the gift tax exclusion at H&R Block.

Report Nonqualifying Stock Option Sales

Do you know how to report taxes on stock option sales? Learn more from the tax experts at H&R Block.

Taxes on Alimony and Child Support

Learn about the tax implications of alimony payments and child support from the tax experts at H&R Block.

Incentive Stock Options (ISO)

Learn more about Form 3921 and incentive stock option rules with the tax experts at H&R Block.