A capital gain is a profit that results from a disposition of a capital asset, such as stock, bond or real estate, where the amount realized on the disposition exceeds the purchase price. The gain is the difference between a higher selling price and a lower purchase price. Conversely, a capital loss arises if the proceeds from the sale of a capital asset are less than the purchase price.
Capital gains may refer to "investment income" that arises in relation to real assets, such as property; financial assets, such as shares/stocks or bonds; and intangible assets such as goodwill.
Many countries impose a tax on capital gains of individuals or corporations, although relief may be available to exempt capital gains: in relation to holdings in certain assets such as significant common stock holdings, to provide incentives for entrepreneurship, or to compensate for the effects of inflation.
Famous quotes containing the words capital and/or gain:
“A good many have been thrown out on their broad capital bases.”
—John Dos Passos (1896–1970)
“If goodness were only a theory, it were a pity it should be lost to the world. There are a number of things, the idea of which is a clear gain to the mind. Let people, for instance, rail at friendship, genius, freedom, as long as they will—the very names of these despised qualities are better than anything else that could be substituted for them, and embalm even the most envenomed satire against them.”
—William Hazlitt (1778–1830)