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Capital gain

For U.S. federal tax purposes, a capital gain generally arises when a capital asset is sold for more than its adjusted basis.

By Betta Signals Research Desk · Reviewed October 24, 2026

Plain-English definition: For U.S. federal tax purposes, a capital gain generally arises when a capital asset is sold for more than its adjusted basis.[1]

How the term is used

An unrealized price increase is economically important but is not the same as a realized taxable gain. Holding period, basis adjustments, jurisdiction, account type, and transaction details affect tax treatment.[1]

What to check before relying on it

Tax rules are personal and can change. Betta Signals can explain return components but cannot determine a reader's basis, taxable amount, or filing obligation.

Example

Buying shares for $1,000 and later selling them for $1,200 creates a $200 gross price gain before commissions, basis adjustments, and applicable tax rules.

Price returnTotal returnDistribution

Research last reviewed: October 24, 2026. This definition is educational and does not evaluate a particular security.

Sources

  1. IRS Topic No. 409: Capital Gains and Losses — U.S. federal tax treatment and terminology for capital gains and losses. Accessed October 24, 2026.