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What are Capital Gains?

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What are Capital Gains?

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In the world of investing, finance, and taxes, the words “capital gains” have a specific meaning. What are capital gains? Capital gains are profits made from investing your capital, or excess money. You can invest in gold coins, real estate, stocks and bonds, cars, race horses, all kinds of things. When you invest, you pay a certain purchase price for something. When you sell it, you get a certain price for it. If you sell it (the stock, the gold, the real estate) for more than you paid for it, you have a capital gain. If you sell it for less, you have a capital loss. Normally, this wouldn’t matter to anyone but you, as you fine tune your investing criteria to make more gains and less losses. But unfortunately, we live in a world of big government that believes it has a right to a share of any gains you make via taxation. Pour through annual reports, study hundreds of businesses, save all your money (after you have already paid taxes on it once) and invest it in some stock. You do all

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Capital gains are profit that results from the appreciation of a capital asset. The gain comes from the asset appreciating in value from its purchase price. If the item depreciates in value since its purchase, then it is called a capital loss. Capital gains can occur in assets such as property or goods, as well as in financial assets such as stocks or bonds. Nearly everything you use and own is a capital asset and can be subject to tax. Anything you sell for more than the actual purchase price, resulting in capital gains, can be taxable. A capital loss is not tax deductible. Capital gain tax is variable depending on the length of time you have held the asset. If the asset has appreciated and is sold within a year of purchase, then the tax rate is the same as that for ordinary income, which can rise to 35% in the progressive tax system. This is considered short-term capital gains. If the appreciated asset is sold after a year of purchase, the profit is considered long-term capital gains

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A. Any profits or gains arising from a transfer of a capital asset effected in the previous year, subject to certain exception, are chargeable to income tax under the head Capital Gains. Such profits or gains are deemed to be the income of the previous year in which the transfer takes place.

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Capital gain is the difference between the selling price and buying price of a stock less the commission. For example, if you sold a stock for $1000 (inc selling fee) and paid $800 (inc buying fee), you would have a capital gains of $200. Capital gains tax are subject to a 50% inclusion rate. This means that 50% of your profit will be included as income. So in our above example, $100 would be added to your income and taxed at your marginal rate. Or another way to look at it is that any profits from a stock sale in a non-reg account are taxed at HALF your marginal rate. The 50% inclusion rate is a reason why most financial gurus suggest that you keep investments for the purposes of capital appreciation/gain outside of your RRSP. If you keep your capital appreciation/gain assts inside an RRSP, you will be taxed on 100% of the gain because all income withdrawn from an RRSP is taxed at your marginal rate. Another advantage of keeping your capital appreciating stocks outside of an RRSP is b

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The Internal Revenue Service (IRS) defines capital gains as the net amounts of taxable income gained, in terms of the value of assets, over the liabilities and losses that are associated with the assets if they are sold, exchanged, or traded. Question: What are capital losses? Answer: Capital losses are the deductions and liabilities taken against capital gains when an asset is sold, traded, or exchanged. Question: What are long term capital gains? Answer: 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 m

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