Short-Term Gain


DEFINITION of 'Short-Term Gain'

A capital gain realized by the sale or exchange of a capital asset that has been held for exactly one year or less. Short-term gains are taxed at the taxpayer's top marginal tax rate.

A short-term gain can only be reduced by a short-term loss. A taxable capital loss is limited to $3,000 for single taxpayers and $1,500 for married taxpayers filing separately.

BREAKING DOWN 'Short-Term Gain'

Short-term gains and losses are netted against each other. For example, assume a taxpayer purchased and sold two different securities during the tax year: Security A and Security B. If he/she earned a gain on Security A of $5,000 and a loss on Security B of $3,000, then the net short-term gain is $2,000 ($5,000 - $3,000).

  1. Capital Loss

    The loss incurred when a capital asset (investment or real estate) ...
  2. Short Term

    1. In general, holding an asset for short period of time. 2. ...
  3. Capital Gain

    1. An increase in the value of a capital asset (investment or ...
  4. Long Term

    Holding an asset for an extended period of time. Depending on ...
  5. Time Horizon

    The length of time over which an investment is made or held before ...
  6. Marginal Tax Rate

    The amount of tax paid on an additional dollar of income. The ...
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