Capital Gains

See Also:
Tax Brackets
Marginal Tax Rate
Deferred Income Tax
Flat Tax Rates
Company Valuation

The capital gains definition is the proceeds from the sale of an asset. These gains can be realized from the sale of stocks, bonds, real estate, equipment, intangible assets, or other property. When the asset or property is sold, the capital gain is calculated by subtracting the asset’s book value from its selling price. If the selling price is higher than the book value, it is a capital gain.
It can also refer to an increase in the value of an asset. If the value of an asset increases while held, the increase in value above the asset’s purchase price is considered a capital gain. This gain is considered unrealized until the asset is sold.


[button link=”https://strategiccfo.com/scfo-lab-sl” bg_color=”#eb6500″]Learn About The SCFO Lab[/button]


Capital Gains Equation

Capital Gains = Selling Price – Book Value

Losses

A capital loss is the loss incurred on the sale of an asset when the book value exceeds the selling price. Capital losses can occur from the sale of stocks, bonds, real estate, equipment, intangible assets, or other property. When the asset or property is sold, the capital loss is calculated by subtracting the asset’s book value from its selling price. If the book value is higher than the selling price, the company incurs a capital loss.
A capital loss can also refer to a decrease in the value of an asset. If the value of an asset decreases while held, the decrease in value below the asset’s purchase price is considered a capital loss. This loss is considered unrealized until the asset is sold.

Equation

Capital Loss = Selling Price – Book Value

Tax Rates

These gains are taxed according to a rate, called the capital gains tax rate, which may be different from the tax rate for regular income (depending on tax laws at the time). Long term capital gains are capital gains on assets held for more than one year. Short term capital gains are capital gains on assets held for less than one year.
Presently, in the U.S., long term capital gains tax rates are lower than regular income tax rates for individuals. Short term capital gains tax rates are the same as regular income tax rates for individuals. For companies, long term capital gains tax rates and short term capital gains tax rates are the same as regular income tax rates. In the U.S., the taxpayer may employ techniques to defer or reduce capital gains taxes.
capital gains

ARTICLES YOU MIGHT LIKE

The Struggles of Private Company Accounting

Hiring the right accountant  When I meet a business owner operating at a successful $10 million in revenue, they often mention, “My CPA”… I immediately know that CEO/Entrepreneur is referring to their Tax CPA.  That is because one thing that all Entrepreneurs have in common is that they must file a tax return.  So, from

Read More »

IN CRISIS? GET A STRATEGIC CFO! – CEO Blindspots Podcast

Friend of the firm, Birgit Kamps, recently had Strategic CFO President, Dan Corredor, as a guest on her podcast, CEO Blindspots. CEO BLINDSPOTS HOST: Birgit Kamps. She was speaking five languages by the age of 10, and lived in five countries with her Dutch parents prior to becoming an American citizen. Birgit’s professional experience includes starting

Read More »

SHRM calls ICHRA the 401K for Group Health Benefits

Fed-up with group health insurance? ICHRA is the new way to offer great health benefits and avoid ACA penalties, SHRM calls it the 401K for group health benefits.  In 2020 the Department of Labor, HHS and IRS changed the rules for employer health benefits. They changed the Affordable Care Act mandates and penalties for every

Read More »

JOIN OUR NEXT SERIES

Financial Leadership Workshop

MARCH 28TH-31ST 2022

SHARE THIS ARTICLE

JOIN THE NEXT STRATEGIC CFO™ SERIES

Strategic CFO™ Financial Leadership Workshop
The Art of the CFO®

Days
Hours
Min
Sec

September 12-15th 2022