wikiHow Calculating Capital Gains Glossary * Capital Asset: An asset held for investment purposes, such as stocks, bonds, and real estate. * Capital Gain: The profit made from selling a capital asset for more than its original cost. * Cost Basis: The original price paid for a capital asset, adjusted for any changes due to commissions, fees, and other expenses. * Short-Term Capital Gain: A capital gain made from selling a capital asset that was held for one year or less. * Long-Term Capital Gain: A capital gain made from selling a capital asset that was held for more than one year. * Basis Step-Up: A change in the cost basis of an inherited asset to its fair market value at the time of inheritance. * Loss Carryover: The ability to carry forward a net capital loss from one year to offset future capital gains. * Net Capital Gain: The total amount of capital gains minus any capital losses for a given year. * Depreciation Recapture: A tax on the gain realized from the sale of an asset that has been depreciated. * Wash Sale: The sale of a security at a loss, followed by the purchase of the same or a substantially similar security within a 30-day period. * Adjusted Basis: The cost basis of a capital asset adjusted for any changes due to depreciation, improvements, and other factors. * Holding Period: The length of time that a capital asset is held before it is sold. * Tax Rate: The percentage of capital gains that is subject to federal, state, and local income tax. * Cost Basis Method: The method used to calculate the cost basis of an asset, such as specific identification, average cost, or first-in, first-out (FIFO). * Qualified Dividend: A dividend paid by a U.S. corporation or qualified foreign corporation that is subject to a lower tax rate than ordinary income. Page