capital gains or losses

capital gains or losses

n. particularly when calculating the tax liability of an individual or business, this is the difference between the original cost plus the cost of capital improvements, excluding maintenance, called "basis" and the sales price. Capital gains can be a terrible financial shock to individuals who bought a house or business many years ago for the going price and now find it is highly valued, greatly due to inflation. Example: a couple buys a house in 1950 for \$20,000 (then a high price) and upon retirement want to sell it for \$400,000. There is a potential of tax on a \$360,000 gain. There are some statutory cushions to ease this blow, such as a one-time \$125,000 deduction from the gain (profit) on sale of real property if the seller is over 55, deferred (temporarily putting off the) tax if investment property is "exchanged" (profits are invested in other property) under strict rules, making lifetime gifts to children or charity, or buying another home. Another escape is death, which gives the property to heirs at the value on the day of the owner's death without capital gains tax ("stepped up basis"). Reduction of capital gains tax rates have been resisted by a majority of Congress, partly because lowering the rate generally would become a tax break for the wealthy. (See: basis, delayed exchange, exchange)

References in periodicals archive ?
Solution: The NOL calculation on Form 1045, Schedule A and ATNOL calculations must include all non-business and business capital gains and losses equal to the net capital gains or losses from Form 1040, Schedule D Capital Gains and Losses.
Assuming there were no other capital gains or losses recognized during the year and this \$200,000 is distributed to the mutual fund shareholders when the individual still owns one-tenth-of-one-percent interest, he would have to recognize a \$200 capital gain on his investment, even if the value of the interest in the fund plus the distribution he receives results in no actual gain.
If you sold part or all of your mutual fund, as many people did when Fidelity Magellan stumbled last year because of its bond holdings, you need to report any dividends and capital gains or losses.
Transactions which result in capital gains or losses do not qualify for the hedging exemption.
1402(a) (3) (A) excludes capital gains or losses from SE net earnings.
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