Capital gains tax

 

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Capital gains tax

The tax levied on profits from the sale of capital assets. A long-term capital gain, which is achieved once an asset is held for at least 12 months, is taxed at a maximum rate of 20% (taxpayers in 28% tax bracket) and 10% (taxpayers in 15% tax bracket). Assets held for less than 12 months are taxed at regular income tax levels, and, since January 1, 2000, assets held for at least five years are taxed at 18% and 8%.

Capital gains tax

A tax placed on the profits from the sale of real estate or investments.

Capital gains tax

Capital gains tax arises as a result of a 'chargeable event' - in the case of stock market investment, the disposal of shares at a profit.Just because you make a capital gain does not mean you necessarily have to pay tax on the gain. It all depends on your personal tax position, and on whether your total gains for the year are within the annual exemptions. The annual exemption per spouse in the tax year 2002-2003 is £7,700, rising to £7,900 for the 2003-2004 tax year.The gain you make beyond your annual exemption is added to any other income you may have and taxed as additional income at your marginal rate, be it 20% or 40%.Whatever the eventual tax position, it is important to keep records that enable you to calculate the gain on the sale of an asset, and ideally your record-keeping should be in a form that lends itself to completing your Tax Return.The essential information you need for each asset is:Base or original costDate of acquisitionDate of disposalDisposal proceedsWhen you have this information you are in a position to take advantage of indexation, taper relief, losses and your annual exemption.



Similar Matches

Capital account

Capital account

Net result of public and private international investment and lending activities.


Capital outflow

Capital outflow

A net flow of capital, real and/or financial, out of a country, in the form of reduced holdings of domestic assets by foreigners and/or increased purchases of foreign assets by domestic residents. Recorded as negative, or a debit, in the balance on capital account.


Working capital

Working capital

Defined as the difference between current assets and current liabilities (excluding short-term debt). Current assets may or may not include cash and cash equivalents, depending on the company.


Authorised share capital

Authorised share capital

The total number of shares a company is authorised to issue by reference to its memorandum and articles of association.The amount of issued share capital must be lower or equal to the authorised share capital. i.e. a company cannot issue more shares than it is authorised to issue in its Articles.


Recapitalization proposal

Recapitalization proposal

Often used in risk arbitrage. Plan by a target company to restructure its capitalization (debt and equity) in a way to ward off a hostile or potential suitor.


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