Capital Gain

A capital gain is profit that results from the sale of a capital asset. Capital assets are assets that create more property, such as factories that produce goods, mines that produce valuable minerals, or stocks and bonds, which produce dividends. In many cases, special tax liabilities apply to capital gains, both for individuals and corporations. In the U.S., capital gains taxes are assessed differently depending on whether or not the asset in question was held for more than a year. The U.S. also allows individuals to defer capital gains tax in a number of ways, including setting up a charitable trust or private annuity trust.