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In U.S. Federal income tax law, recognition is among a series of prerequisites to the manifestation of gains and losses used to determine tax liability. First, in the series for manifesting gain and loss, a taxpayer must "realize" gain and loss. This word "realize" is a term of art that refers to the realization requirement where the taxpayer ...
Capital gains refer to an increase in the value of an asset, such as a stock or a bond. If the investor sells that appreciated asset, it creates a realized capital gain, which is taxable.
Section 1031(a) of the Internal Revenue Code (26 U.S.C. § 1031) states the recognition rules for realized gains (or losses) that arise as a result of an exchange of like-kind property held for productive use in trade or business or for investment. It states that none of the realized gain or loss will be recognized at the time of the exchange.
Non-recognition is conferred on a like-kind exchange on the basis that the form of the taxpayer's investment changes while the substance of the investment does not. In a like-kind exchange, the realized gain or loss usually never disappears; rather, the unrecognized gain or loss typically carries over into the new asset.
Earning capital gains: Many bonds are not held until maturity, as an investor you may choose to sell your bond before it reaches its maturity date. When you sell a bond for more than you paid for ...
Schedule D is an IRS tax form that reports your realized gains and losses from capital assets, that is, investments and other business interests. It includes relevant information such as the total ...
The gain realized on the sale of a principal residence is not taxable. A gain realized on the sale of other real estate held at least 30 years, however, is not taxable, although this will become subject to 15.5% social security taxes as of 2012. (There is a sliding scale for non-principal residence property owned for between 22 and 30 years.)
Here are 5 things investors should know about stocks vs bonds. This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique ...