Capital gains are the amount owed on a profit that an investor makes when an investment is sold.
Capital gains are the profits made from selling an asset, such as a stock, bond, or real estate, for more than its purchase price.
Yes, capital gains are often owed on stock options. When an employee exercises their stock options and purchases shares of a company's stock, they may have to pay capital gains taxes on any profits made when they eventually sell those shares.
The difference between long-term and short-term capital gains taxes is based on how long an asset is held before it is sold. Long-term capital gains are profits made from assets held for more than a year before being sold, and these are typically taxed at a lower rate than short-term capital gains, which are profits made from assets held for a year or less before being sold. The reason for the difference in tax rates is to encourage long-term investment and discourage frequent buying and selling of assets.