Unrealized Gain Definition (investopedia.com) "An unrealized gain occurs when the current market value of an asset exceeds its original purchase price or book value, but the asset has not been sold. It is sometimes called a "paper" gain, since it only exists as an accounting entry until it is realized. A paper loss is similarly an unrealized loss.
"An unrealized gain becomes realized once the position is ultimately sold for a profit. It is possible for an unrealized gain to be erased if the asset's value drops below the price at which it was bought.
Key Takeaways
- An unrealized gain is a theoretical profit that exists on paper, resulting from an investment that has not yet been sold for cash.
- Unrealized gains are recorded on financial statements differently depending on the type of security, whether they are held-for-trading, held-to-maturity, or available-for-sale.
- Gains do not affect taxes until the investment is sold and the gain is realized.
- If an investment is held for longer than a year, the profit is taxed at the capital gains tax rate.
- An unrealized loss is the opposite of an unrealized gain where an investment has decreased in value but has not yet been sold.
How an Unrealized Gain Works
"An unrealized gain occurs when the current price of a security is higher than the price the investor initially paid for the security, including any fees associated with the purchase. Many investors calculate the current value of their investment portfolios based on unrealized values. In general, capital gains are taxed only when they are sold and become realized.
Investors may choose to sit on unrealized gains for tax benefits. Most assets held for more than one year are taxed at the long-term capital gains tax rate, which is either 0%, 15%, or 20% depending on one's income.
Assets held for one year or less are taxed as ordinary income, with rates ranging from 10% to 37%. Full article
What's True: "It's true Harris endorsed a plan to institute a 25% tax on unrealized capital gains. However …
What's False … "The plan specified that the tax would apply only to those with wealth exceeding $100 million — i.e., not the middle class. Given that it would therefore only affect the wealthiest 0.01% in the country, it is unlikely to cause an "economic calamity." While the Democratic National Convention took place in Chicago, Illinois, in August 2024, a rumor began to spread that the party's presidential nominee, U.S. Vice President Kamala Harris, had endorsed a 25% tax on unrealized capital gains (archived):" . . .
Given that this measure is only set to affect the wealthiest 0.01% of the population, however, it is unlikely to cause an "economic calamity." If it were to apply to people in the middle class, on their homes or their investments, it might, in fact, affect their purchasing power, their ability to plan for the future or their ability to own homes. As it stands, however, the measure is too limited in scope for that. Full article...
O'Leary: It's 'unprecedented' for Kamala Harris to do this - YouTube
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