A gain refers to an increase in value, measured by the difference between the adjusted tax basis and the selling price. It is a key concept in accounting and finance, encapsulating various types, such as capital gain, realized gain, and recognized gain.
A gain resulting from the length of time an asset has been held rather than its use in the operations of a business.
A realized gain represents the profit earned from the sale of an asset, calculated as the difference between the asset's selling price and its original purchase price. This gain, although realized, is not always immediately subject to taxation.
In the context of tax-free exchanges, a recognized gain is the portion of a gain that becomes taxable. While a realized gain represents the total profit from the sale or exchange of an asset, the recognized gain is the part that the IRS considers taxable income.
