Almost everything we own and use is a capital asset. Some examples are a home, household furnishings, stocks, or bonds.
Any time a capital asset is sold, the difference between the selling price and what you paid for it originally results in either a capital gain or capital loss. When the asset is sold, besides the cost and the selling price, you must look at how long you have owned that asset. If you have owned the asset for a year or less, then it is considered a short term asset. If you have owned the asset for more than a year, then it is considered a long term asset.
Depending on your tax bracket, your capital gain could be taxed at a 0%, 10%, or 15% tax rate. However, if your income exceeds $400,000 or if your tax bracket is the maximum 39.6%, then your capital gain will be taxed at a 20% tax rate. If you or someone you know is having tax issues you can get ahold of us at Hoorfarlaw.com or gives us a call at 816-524-4949.