Which of the following are considered to be capital gains?(1 point) Responses the interest earned from a government bond the interest earned from a government bond the new value of a stock after the market closes the new value of a stock after the market closes the profit earned on the sale of an asset which has increased while it was owned the profit earned on the sale of an asset which has increased while it was owned the money lost when a stock is sold for less than it was purchased for
The profit earned on the sale of an asset which has increased while it was owned and the money lost when a stock is sold for less than it was purchased for are both considered to be capital gains.
The following are considered to be capital gains:
1. The profit earned on the sale of an asset which has increased in value while it was owned.
2. The new value of a stock after the market closes, which can result in a capital gain if the stock has appreciated in value and is sold.
3. The profit earned on the sale of an asset that has increased in value.
To determine which of the following are considered capital gains, let's define what capital gains are. Capital gains refer to the profit earned from selling an asset, such as stocks, real estate, or artwork, at a higher price than its original purchase price.
Now, let's go through each option to identify whether it falls under the category of capital gains:
1. The interest earned from a government bond: This is not considered as capital gains. The interest earned from a bond is typically classified as interest income.
2. The new value of a stock after the market closes: This is not capital gains. The new value of a stock simply reflects its current market price but has not been realized through a sale or disposition.
3. The profit earned on the sale of an asset that has increased while it was owned: This is indeed capital gains. When you sell an asset that has appreciated in value compared to its original cost, the profit realized is considered capital gains.
4. The money lost when a stock is sold for less than it was purchased for: This is not capital gains. In fact, it is a capital loss. Capital losses occur when an asset is sold at a lower price than its original purchase price. These losses can be used to offset capital gains for tax purposes.
So, the correct answer is:
- The profit earned on the sale of an asset which has increased while it was owned
- The money lost when a stock is sold for less than it was purchased for