Term of the Day
The amount by which the
sale price of an
asset exceeds its
cost of acquisition. If the price of a
stock increases, but it is not sold, the
gain is unrealized. Realized gains are
income for
tax purposes, unless they come from a tax-exempt or tax-deferred asset. The type of taxation varies according to how
long the asset has been owned. If the
investment was held for more than a year, gains are subject to long-term
capital gains rate, which is more favorable than the rate applied to ordinary income.