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

Reporting Babysitting Income

Learn more about reporting babysitting income on your federal taxes with help from the tax experts at H&R Block.

Is Your Inheritance Considered Taxable Income?

Is an inheritance considered taxable income? Learn more from the tax experts at H&R Block.

What Is Alternative Minimum Tax?

What is the alternative minimum tax, and are you eligible for an exemption? Learn more about AMT rates and get tax answers at H&R Block.

How is Taxable Income Determined?

Determining your taxable income is an important part of filing taxes. Learn how calculate your taxable income with the experts at H&R Block.