Capital Gains and Losses

Question 1

Profit received when selling a capital asset

Answer 1

Capital Gain

Question 2

Almost anything you own and use for personal or investment purposes. Examples include: stock, bond, mutual fund, real estate, jewelry, vehicle, boats, collectibles, and cryptocurrency

Answer 2

Capital Asset

Question 3

Capital Gain =

Answer 3

Selling Price – Basis

Question 4

How long the asset has been held (owned)

Answer 4

Holding Period

Question 5

Initial price plus any commissions paid when purchased and sold

Answer 5

Adjusted Basis

Question 6

Gain if asset owned 1 year or less- taxed as ordinary rate

Answer 6

Short-Term Capital Gain

Question 7

Gain if owned more than 1 year- taxed at 0%, 15% or 20% based on income

Answer 7

Long-Term Capital Gain

Question 8

Difference between your capital gains and your capital losses
Rule Exceptions- long-term capital gain on “collectible Assets) can be taxed at a max of 28% (coins, precious metals, antiques, fine art)

Answer 8

Net Capital Gain

Question 9

Wash Sale Rule

Answer 9

must wait 31 days to buy back the asset to be able to deduct the loss

Question 10

Gifted Property

Answer 10

• If sold at a gain, the adjusted basis is the adjusted basis of the donor
• If sold at a loss, the adjusted basis is the fair market value on the date of the gift
• If sold between donor’s adjusted basis and fair market value of the gift, NO gain or loss is realized

Question 11

Inherited Property

Answer 11

• If asset has appreciated since original purchase, the basis is “stepped up” to market value
• If asset depreciated since original purchase, the basis is “stepped down” to either the value at the date of death or the alternative valuation date (6 months after death)