Basics Beginner: Capital Gains

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1.
Short-term assets are assets held _______ month(s) or fewer.
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Twelve. This has implications for taxation.
2.
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.
3.
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.
4.
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.
5.
The amount you get for selling an asset is known as the basis.
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False. The amount you get for selling an asset is called the amount realized.