Taxable Event

AAA

DEFINITION of 'Taxable Event'

Any event or transaction that results in a tax consequence for the party who executes the event. Common examples of taxable events for investors include receiving interest and dividends, selling securities for a gain and exercising options.

INVESTOPEDIA EXPLAINS 'Taxable Event'

Investors should focus on limiting their taxable events, or at least minimizing high tax rate events while maximizing low tax rate ones.

Holding on to profitable stocks for more than a year (to eliminate short-term capital gains) is one of the easiest ways to minimize the effects of taxable events.

RELATED TERMS
  1. Inherited Stock

    A stock that an individual obtains through an inheritance after ...
  2. Paper Profit (Paper Loss)

    Unrealized capital gain (or capital loss) in an investment. It ...
  3. Cost Basis

    1. The original value of an asset for tax purposes (usually the ...
  4. Realized Gain

    A gain resulting from selling an asset at a price higher than ...
  5. Capital Gain

    1. An increase in the value of a capital asset (investment or ...
  6. Realized Loss

    A loss is recognized when assets are sold for a price lower than ...
RELATED FAQS
  1. What are some examples of different taxable events?

    A taxable event is any event or occurrence that results in a tax liability. All investors or parties that pay taxes experience ... Read Full Answer >>
  2. How and when can you convert a Registered Retirement Savings Plan (RRSP) into a Registered ...

    If you are wondering about a conversion from your Registered Retirement Savings Plan, or RRSP, into a Registered Retirement ... Read Full Answer >>
  3. What does it mean to be long or short a derivative?

    A derivative is a type of security in which the price of the security is dependent on one or more underlying assets. A derivative ... Read Full Answer >>
  4. Why are fee-based accounts preferred by many high net worth individuals (HNWI)?

    High net worth individuals (HNWIs) often prefer fee-based investment accounts for reasons that include reduced conflicts ... Read Full Answer >>
  5. What is an over-the-counter derivative?

    A derivative is a type of security in which the price of the security depends on the price of the underlying asset. Depending ... Read Full Answer >>
  6. What does the underlying of a derivative refer to?

    A derivative security is a financial instrument in which the price of the derivative is dependent on its underlying asset. ... Read Full Answer >>
Related Articles
  1. Retirement

    Tax Tips For The Individual Investor

    We give you seven guidelines to help you keep more of your money in your pocket.
  2. Forex Education

    Forex Taxation Basics

    Trading forex can make for a confusing time organizing your taxes. These simple steps will keep everything straight.
  3. Taxes

    Capital Gains Tax 101

    Find out how taxes are applied to your investment returns and how you can reduce your tax burden.
  4. Personal Finance

    Get A Short-Term Advantage In The Money Market

    This investment vehicle is often the perfect stop-gap measure for growing your money.
  5. Active Trading

    Seek Out Past Losses To Uncover Future Gains

    Tax loss carry-forwards can help reduce the tax burden of owning a profitable fund.
  6. Retirement

    Cut Your Tax Bill

    Paying your bills early or giving an extra donation now can help you come tax time.
  7. Taxes

    What is Adjusted Gross Income?

    Adjusted gross income (AGI) is a term from the Internal Revenue Code. AGI is used to determine a person’s income taxes due.
  8. Investing

    How To Insure Non-Traditional Assets

    You acquire these assets to hedge against financial turbulence in conventional investment markets. What's the best way to protect them?
  9. Taxes

    Explaining Progressive Tax

    A progressive tax is a levy in a tax system where the tax rate increases as the taxable base increases.
  10. Entrepreneurship

    Can I Become An Angel Investor?

    Because of SEC rules, you already need significant assets to become an angel investor.

You May Also Like

Hot Definitions
  1. Mixed Economic System

    An economic system that features characteristics of both capitalism and socialism.
  2. Net Worth

    The amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure ...
  3. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  4. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  5. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  6. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
Trading Center