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An increase in the market value of an asset—that is, the positive difference between an asset's adjusted purchase price and selling price. For example, when a share is sold at a price that is greater than the cost of its acquisition, there is a gain in the value of capital. Various financial instruments are susceptible to capital gain and tax as long as they are held for more than 12 months (long term) or less (short term). Federal statute specifies the minimum holding period before capital gain can be taxed. Taxable financial instruments include stocks, bonds, and mutual funds. The gain is conventionally not actually realized until the asset is sold.

Capital gain is taxed because of the appreciation of capital or the realization of ...

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