Basics Beginner: Capital Gains

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1.
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.
2.
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.
3.
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.
4.
Long-term capital gains are taxed at a higher rate than short-term capital gains.
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False. Long-term gains are taxed at a lower rate than short-term gains.
5.
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.