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Investing Basics Beginner: Capital Gains

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1.
You can deduct up to _______ in capital losses on your income tax forms each year.
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$3,000. If your losses exceed your gains, you can deduct up to $3,000 in capital losses.
2.
The difference between the original price of an asset and the price you sell it for is known as its _______.
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Realized capital gain or loss. The realized gain or loss is the difference between the price at the time you sell it and the original price you paid for it.
3.
A capital gain is the amount of money you make when you buy an investment.
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False. A capital gain is the amount of money you make when you sell an investment.
4.
You have a capital loss on an investment if your amount realized is less than your basis.
Choose wisely. There is only one correct answer.
True. The amount realized is what you earn from a sale, and the basis is what you paid for it.
5.
Sales of art, antiques, gems, and stamps are exempt from capital gains taxes.
Choose wisely. There is only one correct answer.
False. Collectibles, including art, antiques, gems, and stamps, are subject to capital gains taxes.