Amount Recognized


DEFINITION of 'Amount Recognized'

The amount of capital gain/loss that must be reported on the taxpayer's tax return in any given year. The amount recognized refers to the tax implications of the sale of an asset or investment and will take into account any selling or brokerage fees.

The amount recognized may differ from the amount realized, since the amount realized is not typically used in a taxable situation.

BREAKING DOWN 'Amount Recognized'

In some types of like-kind exchanges of property, capital gains that are realized are often not recognized until a later tax year. Usually these gains are deferred until the property that they were exchanged for is finally sold.

For example, say a taxpayer buys a tract of land as an investment for $20,000, then exchanges it for another similar type of investment ten years later in a qualified 1031 exchange. In a Section 1031 exchange, the amount recognized for tax purposes will not be included in the personal tax return until there are no more Section 1031 exchanges related to the land investment.

  1. Capital Asset

    A type of asset that is not easily sold in the regular course ...
  2. Recognized Gain

    When an investment or asset is sold for an amount that is greater ...
  3. Tax Gain/Loss Harvesting

    Selling securities at a loss to offset a capital gains tax liability. ...
  4. Recognized Loss

    When an investment or asset is sold for less than its purchase ...
  5. Capital Gain

    1. An increase in the value of a capital asset (investment or ...
  6. Section 1031

    A section of the U.S. Internal Revenue Service Code that allows ...
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