Capital Gains Tax

A capital gains tax is a type of tax levied on profits an investor realizes when he/she sells a capital asset for a price that is higher than the purchase price. Capital gains taxes are only triggered when an asset is realized, not while it is held by an investor. That means that he/she can own shares of stock in a company that appreciate every year, but does not owe a capital gains tax on the shares until he/she sells them, no matter how long they are held.

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