Some basic rules to know regarding capital gains:
- A capital gain is the profit realized from holding a security.
- A short-term capital gain is the profit realized on a security held for one year or less.
- A long-term capital gain is the profit realized on the sale of a security held for more than one year.
- The basic rule for calculating capital gains is the sales price minus the cost of selling less the adjusted tax basis (cost basis), which equals the taxable capital gain or loss.