Capital Gains Tax

The tax imposed on capital gains is termed as capital gains tax. Capital gains taxes are realized only when an asset is sold and not while it is still held by the investor. For example, the shares hold by an investor can increase in value every year, but a capital gains tax is incurred only when they are sold. The capital gain tax laws vary from country to country and there are different rates of transactions for individuals as well as corporations. In the United States of America, capital gains are subjected to individuals and corporations on their annual net capital gains. It is also important to note that tax is imposed only on net capital gains because if two stocks are sold by an investor during a year for a profit and an equal loss, the amount of capital loss on the losing investment will oppose the capital gains incurred from the winning investment.      

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Edited and Updated 31st May 2014

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