What’s a capital gain or a capital loss?

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