What are Long Term Capital Gains?
Many of the things that are owned by individuals for personal or investment reasons are called capital assets for tax purposes. More and more people are investing in stocks, bonds, mutual funds, precious metals, and other assets to increase their income. Profits earned from the purchase and sale of capital assets are called capital gains. In the United States, the taxes levied on these profits differ, depending on the length of time that a person holds a given asset before selling it. Long term capital gains are gains from assets that were held for more than one year before being sold. Long term capital gains are taxed at a lower rate than short term capital gains in the United States. Depending on the tax bracket a person is in, their long term capital gains rate may be either five percent or 15%. The reasoning behind the different rates is to provide an incentive for investors to minimize short term, speculative investments, thereby providing better stability in the financial markets
Long term capital gains are realized on gains and losses from assets that are held for more than one year. Question: What are short term capital gains? Answer: Short term capital gains are gains and losses that are realized on assets that are held for less than a year. Question: Are there distinguishing forms of capital? Answer: There are several forms of capital such as circulating, fixed, liquid, frozen, productive, and financial. • Circulating capital is money and other assets that are used to purchase goods such as fuel and raw materials. It is also used to pay wages, benefits, and other business related expenses. • Fixed capital are assets that are more durable, such as buildings, machinery, and land. • Liquid capital are assets that can be readily converted into cash if it becomes necessary. Liquid asset may be stocks, bonds, finished products, and other goods that may sold or traded. • Frozen capital are assets like buildings and land that cannot be easily or readily converted t
