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TAX YEAR
2019
Capital Gains and Losses
Capital Gains and Losses Short-Term
The holding period for short-term capital gains and
Capital Assets losses is one year or less.
Most property you own and use for personal or invest-
ment purposes is a capital asset. For example, a house, Long-Term
furniture, car, stocks, and bonds are capital assets. The holding period for long-term capital gains and loss-
es is more than one year.
Noncapital Assets
A capital asset is any property held by you except the Inherited Property
following. Inherited property is considered held long term regard-
• Stock in trade or other property included in inventory less of actual time held by you, the beneficiary.
or held mainly for sale to customers.
• Accounts or notes receivable acquired in the ordinary Securities Traded on an Established Market
course of a trade or business for services rendered or For securities traded on an established securities mar-
from the sale of stock in trade or other property held ket, the holding period begins the day after the trade
mainly for sale to customers. date the securities are purchased and ends on the trade
• Depreciable property used in a trade or business, date the securities are sold.
even if it is fully depreciated.
• Real estate used in a trade or business.
• Copyrights, literary, musical, or artistic compositions, Mutual Funds
letters or memoranda, or similar property created by A mutual fund is a regulated investment company gen-
the individual’s personal efforts, prepared or pro- erally created by “pooling” funds of investors to allow
duced for the individual, or received from a person them to take advantage of a diversity of investments
who created the property. and professional management.
• Supplies regularly used in a trade or business.
Mutual Fund Basis
Investment Property Shares in a mutual fund are generally acquired at vari-
Investment property is property held for the production ous times, in various quantities, and at various prices.
of income or anticipated appreciation in value. A gain or When shares of a mutual fund are sold, it is necessary
loss from the sale or exchange of investment property, to determine which shares were sold and the basis of
such as stocks and bonds, is a capital gain or loss. those shares. You can use either a cost basis or an aver-
age basis to figure gain or loss.
Holding Periods
Cost Basis
Capital gains and losses must be separated according to Cost basis can be used only if you did not previously use
how long you held or owned the property. an average basis for a sale of other shares in the same
