Capital Gains
Capital gains are the amount owed on a profit that an investor makes when an investment is sold.
What are capital gains?
Capital gains are the profits made from selling an asset, such as a stock, bond, or real estate, for more than its purchase price.
Are there capital gains owed on stock options?
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.
What is the difference between long term and short term capital gains taxes?
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.
