Legal Definitions - gains

Gains refer to the profit or increase in value that an investment or asset generates beyond its basic expenses. When an asset is sold, the difference between the selling price and the purchase price is considered a gain or loss. The tax rate for gains or losses varies depending on the type of asset and the duration of ownership.

• If you buy a stock for $100 and sell it for $150, the gain is $50.
• If you purchase a rental property for $200,000 and sell it for $250,000 after holding it for more than a year, the gain is considered a "section 1231 gain" and is subject to a different tax rate.
• If you sell a piece of artwork for $10,000 that you bought for $8,000, the gain is $2,000.

These examples illustrate how gains are calculated by subtracting the purchase price from the selling price. The tax rate for each gain will depend on the type of asset and how long it was held before being sold.