Basics Beginner: Capital Gains

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1.
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.
2.
Long-term capital gains are taxed at higher rates than short-term capital gains.
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False. Long-term gains are taxed at lower rates than short-term gains. This is meant to encourage investors to invest for longer periods.
3.
Almost _______ of all realized capital gains are received from corporate stock sales.
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50 percent. Almost half of all capital gains taxes are taxes on corporate stocks.
4.
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.
5.
You have a capital loss on an investment if your amount realized is less than your basis.
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True. The amount realized is what you earn from a sale, and the basis is what you paid for it.