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:
“The capital is become an overgrown monster; which like a dropsical head, will in time leave the body and extremities without nourishment and support.”
—Tobias Smollett (1721–1771)
“Whether a man hides his bad qualities and vices or confesses them openly, his vanity wants to gain an advantage by it in both cases: just note how subtly he distinguishes between those he will hide his bad qualities from and those he will face honestly and candidly.”
—Friedrich Nietzsche (1844–1900)