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To define capital gains means understanding the value of our assets from the time of purchase.
Short-term capital gains
Assets sold after being held for one year or less that have gained significant value. Short-term gains are typically taxed as ordinary income based on an individual's tax filing status and adjusted gross income. Note that regulations in different countries vary.
Long-term capital gains
Gains realised on assets that have been held for more than one year and are usually taxed at a lower rate than regular income. Note that regulations in different countries vary.
Capital gain explained: Realised vs Unrealised
In contrast to capital gain, сapital loss reflects a decrease in value compared to its purchase price.
Capital gain examples
The calculation of capital gain is ($10 x 100) – ($5 x 100), giving a total of $500 earned by Mr. X in capital gains.
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