Capital is a unique term when it comes to taxes. If it gains value, you pay a tax. If it loses it, you can write at least some of the loss off.
Capital Assets Gains and Losses for Taxes
Practically everything you own is a capital asset. This is true whether you use it for business purposes or personal use. The internet revenue service is very interested in your capital assets. Why? The IRS likes to tax the full gains while only giving you a small break on any lost value. Specifically, you have to report and pay taxes on gains in value of your capital assets when you sell them. Unfortunately, you only get to claim a loss on capital assets if it is an investment property such as stocks. Doesnt seem fair, but that is how the cookie crumbles these days!
Here are some tax issue highlights on capital assets:
1. Generally, you report gains and losses on capital assets by subtracting the price you purchased it for from the price you sold it for. This calculation is reported to the IRS on Schedule D, which should be attached to your 1040 tax return. Lucky you!
2. Capital gains and losses are classified as long-term or short-term. The classification...
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