A capital gain is the profit from selling an asset for more than you paid for it. Capital gains are classified as short-term or long-term based on the holding period, with different tax rates applying.
Capital Gain = Sale Price - Purchase Price - Transaction Costs
Buy 100 shares at $50 ($5,000), sell at $75 ($7,500). Capital gain = $7,500 - $5,000 = $2,500. If held over 1 year in the US, this is a long-term gain taxed at preferential rates.
Short-term gains (held < 1 year) are taxed as ordinary income — up to 37% in the US vs 0-20% for long-term gains. Selling 1 day too early can nearly double your tax bill on the same profit.
Mutual fund distributions can trigger capital gains taxes even if you didn't sell. A fund manager selling positions inside the fund creates a taxable event passed to all shareholders — including those who bought the fund a day before.
In many countries, capital gains are calculated per-lot, not per-position. Selling 100 shares when you bought 50 at $40 and 50 at $80 creates two different gain/loss events. Your cost-basis method (FIFO vs LIFO) determines which lot is sold first.
AllInvestView calculates realised and unrealised capital gains for your portfolio. Generate capital gains tax reports or use the capital gains tax calculator.