Basics Beginner: Capital Gains

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1.
The capital gains tax is a tax on _______.
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The increase in value of an investment. This increase is taxed in the year that you realize the gains.
2.
Sales of art, antiques, gems, and stamps are exempt from capital gains taxes.
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False. Collectibles, including art, antiques, gems, and stamps, are subject to capital gains taxes.
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.
Unrealized gains or losses on your investments must be reported on your tax returns.
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False. Only realized gains or losses must be reported on your tax returns.
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.