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

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  2. Time Horizon

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  3. Marginal Tax Rate

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  4. Capital Gain

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

    Holding an asset for an extended period of time. Depending on ...
  6. Short Term

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