Basics Beginner: Capital Gains

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1.
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.
2.
The amount of time you hold onto an asset is known as the ________.
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Holding period. The holding period is the amount of time you hold onto your asset.
3.
Having an unrealized gain means your asset decreases in value while you are still holding it.
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False. A gain is unrealized if an asset increases, not decreases, in value while you are still holding onto it.
4.
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.
5.
Art may be subject to capital gains taxes when it is sold.
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True. Some collectibles, such as art, also qualify for capital gains taxes.