Capital Gains Taxes & Capital Gains Terms

This section of Capital Gains website discusses capital gains taxes and other terms relating to capital gains and capital loss.

Capital gain and loss

The capital gain or loss is the difference between the amount realized and adjusted basis on the sale or exchange or capital assets or the property that is subject to capital gains taxes or capital loss tax treatment.

Long term capital gains taxes

Long term capital gains are taxed favorably vs. short term capital gains. Capital losses are deducted first against capital gains and other income.

Capital gains distribution

Capital gains distribution is a term used in mutual fund distribution. When mutual fund manager sells some assets in the mutual funds, there are capital gains and capital losses realized. These capital gains and losses are summed up in the capital gains distribution which occurred regularly. Usually capital gains distributions for mutual funds are long term capital gains even if you hold the mutual fund for a short period of time.

Capital loss carryover

A capital loss that is not deductible because it exceeds the annual capital loss ceiling (e.g. $3,000 in 2007) can be carried over. This portion of the capital loss is called capital loss carryover. A capital loss carryover may be deducted from capital gains for later years providing it does not exceed the maximum capital loss deduction limit.

Capital assets: assets subject to capital gains and capital gains taxes

A capital asset is usually what is subject to capital gains and capital gains taxes. Most assets are capital assets subject to capital gains and capital gains taxes. However, certain business assets are not considered capital assets. Please check out our capital assets section for further clarification of capital gains and capital gains taxes on certain assets.