capital gain.The profit realized when a capital asset is sold or exchanged. — Also termed capital gains. Cf. ordinary gain under GAIN(3); capital loss under LOSS. [Cases: Internal Revenue 3230.1–3234. C.J.S. Internal Revenue §§ 128–129, 132, 490–491.]
“Throughout most of the history of income taxation in the U.S., a distinction has been drawn between the rate of taxation on ‘ordinary income’ (or ordinary loss) and ‘capital gain’ (or capital loss). ‘Capital gain’ refers to the income from certain transactions in some assets, called capital assets, or from other transactions that Congress has said should be taxed as capital gain…. The most common form of capital gain or loss transaction is a sale of an asset such as a share of stock or a parcel of land, for cash.” John K. McNulty, Federal Income Taxation of Indi-viduals in a Nutshell 420 (5th ed. 1995).
long-term capital gain.The profit realized from selling or exchanging a capital asset held for more than a specified period, usu. one year. [Cases: Internal Revenue 3260. C.J.S. Internal
Revenue § 127.]
short-term capital gain.The profit realized from selling or exchanging a capital asset held for less than a specified period, usu. one year. • It is treated as ordinary income under current federal tax law. [Cases: Internal Revenue 3260. C.J.S. Internal Revenue § 127.] [Blacks Law 8th]