Intuit Academy Tax Practice Exam 2025 - Free Tax Practice Questions and Study Guide

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What are capital gains?

Losses incurred from investments

Profits from the sale of an asset or investment

Capital gains refer to the profits that an individual or entity realizes from the sale of an asset or investment when the selling price exceeds the purchase price. This concept is fundamental in tax regulations, as capital gains are subject to taxation depending on the duration the asset was held (short-term versus long-term). When an asset such as stocks, real estate, or other investment vehicles is sold for more than its original cost, the difference constitutes a capital gain.

In the context of investing, understanding capital gains is crucial for effective tax planning and investment strategies, as it impacts overall returns and tax liabilities. Investors often aim to minimize their capital gains tax through various means, such as holding investments longer to qualify for more favorable long-term capital gains rates.

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Expenses related to asset purchase

Interest earned on savings

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