Income that arises from the sale of a capital asset. Gain from the sale of securities held for investment, such as shares acquired from stock compensation, is a type of capital gain. If the asset has lost value since acquisition, you have instead a capital loss.

Capital gains and losses may be short-term (held 12 months or less) or long-term (held more than 12 months). Short-term capital gains are taxed at the rates of ordinary income. For the tax rates on long-term capital gains, see a related FAQ.

You must file IRS Form 8949 and Schedule D with your IRS Form 1040 tax return for any tax year in which you sell stock, regardless of whether you have capital gains.