Overview of Capital Gains and Losses

Capital Assets

Capital assets are items held for personal or investment purposes.  A capital asset can be anything except inventory, depreciable personal and real property used in trade or business, items created by the taxpayer's individual effort (such as a poem), accounts receivable, or certain government publications.  Capital assets include stocks and bonds held in the taxpayer’s personal account, a home, furnishings, vehicles, collectibles, gems, jewelry, gold, silver, etc.  Losses from personal use of assets are not deductible (for example, a home) unless they resulted from a casualty.

Holding Period

The holding period determines whether the capital gain or loss is long-term or short-term.  To determine the holding period, start counting on the date after the day the taxpayer acquired the property.  It includes the day the taxpayer sold the property.  Short-term property is property held one year or less.  Long-term property is property held for more than one year.  Short-term gains and losses are netted against each other as are long-term gains and losses.  To calculate the total net gain or loss, combine the net short-term gains or losses with the net long-term gains or losses.  The result is entered on line 16, Part III of Schedule D.


Cathy Fisher

Common Cents Bookkeeping and Tax Preparation

Serving Henderson, NC, Buncombe County, Polk County, Transylvania County


P: 828-595-2835

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