How is the gain or loss determined on the sale of a capital asset?
A sale or exchange of a capital asset will produce a capital gain or loss. A capital asset is everything owned for personal or investment purposes, including stocks, bonds, household goods, cars, jewelry, coin collections, boats, cabins, and homes. Non-capital assets include business property, rental property, and inventory.
A sale or exchange of a capital asset will produce a capital gain or loss. A capital asset is everything owned for personal or investment purposes, including stocks, bonds, household goods, cars, jewelry, coin collections, boats, cabins, and homes. Non-capital assets include business property, rental property, and inventory. The gain or loss from the sale of a capital asset is determined by taking the amount realized less the cost or basis of the property. The amount realized on the sale of property is the amount of cash, property or other assets received in exchange for the item sold. Generally, the amount realized on the sale of a capital asset is cash but sometimes a taxpayer may receive property in exchange for the asset sold. If property is received as part of the exchange, the amount realized will be the fair market value of the property received. The basis of the property is generally the cost of the property. However, if the property was acquired by gift the property will have
