Realized Gain

AAA

DEFINITION of 'Realized Gain'

A gain resulting from selling an asset at a price higher than the original purchase price. Realized gain occurs when an asset is disbursed at a level that exceeds its cost of book value. While an asset may be carried on a balance sheet at a level far above cost, any gains while the asset is still being held would be considered unrealized, as the asset is only being valued at a fair market value.

INVESTOPEDIA EXPLAINS 'Realized Gain'

Once an asset that is being held on the books at an unrealized gain is sold for a realized profit, a firm will predictably see an increase in its current assets and a gain from sale. Such a gain may lead to an increased tax burden, since realized gains from sales are typically taxable income. This is one drawback of turning an unrealized "paper" gain into a realized gain.

RELATED TERMS
  1. Asset Accumulation

    The increase in the value of financial property and investments ...
  2. Unrealized Gain

    A profit that exists on paper, resulting from any type of investment. ...
  3. Realized Loss

    A loss is recognized when assets are sold for a price lower than ...
  4. Fair Market Value

    The price that a given property or asset would fetch in the marketplace, ...
  5. Taxable Event

    Any event or transaction that results in a tax consequence for ...
  6. Capital Gains Tax

    A type of tax levied on capital gains incurred by individuals ...
Related Articles
  1. To Sell Or Not To Sell
    Retirement

    To Sell Or Not To Sell

  2. Reinvesting Capital Gains In Leveraged ...
    Mutual Funds & ETFs

    Reinvesting Capital Gains In Leveraged ...

  3. Overcoming Compounding's Dark Side
    Investing Basics

    Overcoming Compounding's Dark Side

  4. Capital Gains Tax 101
    Taxes

    Capital Gains Tax 101

comments powered by Disqus
Hot Definitions
  1. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  2. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  3. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  4. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
  5. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by ...
  6. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
Trading Center