Recognized Gain or Loss

Definition

  • The amount of gain or loss you report for income tax purposes. You may be able to defer recognizing gain or loss on certain property exchanges, such as like-kind exchanges.

Synonyms
capital loss, recognized gain, recognized loss, capital gain

Alternate Spellings
Recognized Gain, Recognized Loss

Related Terms and Acronyms

  • Active Income Definition,
    • Active income refers to wages, tips, and profits from your business or employment that you partake in. It also includes portfolio income such as interest and dividends, but you cannot usually offset active income with passive losses.
  • Capital Gain (CG) Acronym, Important,
    • The profit made by the seller when real estate or other capital assets are sold. Capital gains are taxed more favourably than earned income. However, this can be dependent on your tax bracket and the length of time you owned the asset before it was sold. You could pay approximately one-third to one-half less tax than you would pay on the same amount of earned salary.
  • Capital Loss Definition,
    • When an asset is sold for less than what you paid, or less than its adjusted basis, it is a capital loss. However, when it comes to taxes a capital loss is not always bad because you can use it to reduce the amount of income being taxed by the amount of the loss, up to $3,000 per year. If your loss is more significant, the excess (or capital loss carryover) can be carried forward indefinitely until the total loss is used.
  • Exchange Definition,
    • A trade of property for other property or services. Like-kind property exchanges are a popular tax-deferral strategy.
  • Income Definition,
    • The money earned in a specific time period.
  • Income Tax Definition,
    • The main source of revenue for the federal government and many Provinces. The tax is based on your earned and unearned income. The amount or percentage taxed is based on the amount of income, using the governments graduated tax scale.
  • Loss Definition,
    • When expenses are larger than revenues.
  • Loss Control Definition,
    • The combined efforts undertaken by both the insurer and the insured to lower the risk, frequency and extent of potential losses.
  • Net Income (NI) Acronym, Very Important,
    • The difference between effective gross income and expenses. The term is qualified as net income before depreciation and debt.
  • Passive Activity Definition,
    • An activity in which a person does not materially participate such as real estate rentals and limited partnerships.
  • Passive Loss Definition,
    • Loss from a passive activity. Passive loss rules limit the amount of passive loss you can deduct to the total of your other income from passive activities.
  • Profit Definition,
    • When revenues exceed expenses.
  • Tax Deferral Definition,
    • The postponement of taxes to a later year, usually by recognizing income or a gain at a later time. Remember, this only delays your tax liability; it doesn't eliminate it.
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