Basics Beginner: Capital Gains

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1.
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.
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.
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.
4.
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.
5.
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.