Capital Gains and Basis

A capital gain is the taxable profit that can result when property is sold for more than its tax basis.

Cost basis is the starting tax value used to measure gain or loss when property is later sold or otherwise disposed of.

A capital loss is the loss that can result when a capital asset is sold or exchanged for less than its tax basis.

Adjusted basis is the updated basis figure used after tax-relevant changes alter the original cost basis of an asset.

Depreciation recapture is the rule that can recharacterize part of a gain on depreciable property as ordinary income because of prior depreciation deductions.

Section 1231 property is certain business or rental property held for more than one year whose sale can produce a special mix of capital-gain and ordinary-loss treatment.

Section 1245 property is generally depreciable personal property and certain other business property whose gain can be recaptured as ordinary income when sold.

Section 1250 property is generally depreciable real property whose sale can involve section 1250 recapture rules and unrecaptured section 1250 gain treatment.

Unrecaptured section 1250 gain is the part of long-term gain from depreciated real property that is subject to a special capital-gain rate calculation.

An installment sale is a sale where at least one payment is received after the year of sale, often requiring Form 6252 reporting.

A short-term capital gain is a capital gain on property held for a shorter holding period and is contrasted with long-term capital gain treatment.

A like-kind exchange is a qualifying exchange of real property held for business or investment that can defer gain recognition under section 1031.

A long-term capital gain is a capital gain on property held long enough to fall into the long-term holding-period category.

The wash sale rule is the tax rule that can limit or defer recognition of a loss when substantially similar securities activity occurs too closely around the sale.

Gain, loss, and basis terms that determine the tax result when property is sold or exchanged.