Definition:
Capital Gains or Capital Losses are the profits or losses a company or individual experiences on the sale of a capital asset. In other words, if the sale price of an asset is higher than the owner's basis in that asset, the result is a capital gain. If the selling price is less than the basis, the result is a capital loss.
For example, if a company purchases a building for $200,000 and sells it two years later for $300,000, the $100,000 is considered a long-term capital gain.
Individual shareholders or business owners who sell their capital shares or owners equity in a business also incur capital gains or capital losses from those sales.
