BROWSE

Gain

What is 'Gain'

An increase in the value of an asset or property. A gain arises if the selling or disposition price of the asset is higher than the original purchase or acquisition price. This positive difference between the sale price and purchase price is referred to as the gross gain; if transaction costs such as commissions and other expenses are considered, this would be a net gain. A gain may either be realized, i.e., when the asset is actually sold, or unrealized, i.e., a paper gain. Another important distinction of a gain is that it may be taxable or non-taxable.

Explaining 'Gain'

In most jurisdictions, realized gains are subject to capital gains tax. However, if the gains accrue in a non-taxable account - such as an Individual Retirement Account in the U.S. or a Registered Retirement Savings Plan in Canada - gains will not be taxed.


For taxation purposes, net realized gains - rather than gross gains - are taken into consideration. In a stock transaction in a taxable account,the taxable gain would be the difference between the (higher) sale price and purchase price, after taking brokerage commissions into consideration.


Further Reading


Financing decisions and bidder gains
www.sciencedirect.com [PDF]
… 2.1. The pecking order of financing choices and bidder gains … considered to be more costly, in terms of adverse selection costs and transaction costs, than internal financing … managers and investors to derive a model, which predicts that firms will never finance their investments …

Trends in park tourism: Economics, finance and managementTrends in park tourism: Economics, finance and management
www.tandfonline.com [PDF]
… 2.1. The pecking order of financing choices and bidder gains … considered to be more costly, in terms of adverse selection costs and transaction costs, than internal financing … managers and investors to derive a model, which predicts that firms will never finance their investments …

Wavelets in economics and finance: Past and futureWavelets in economics and finance: Past and future
www.degruyter.com [PDF]
… 2.1. The pecking order of financing choices and bidder gains … considered to be more costly, in terms of adverse selection costs and transaction costs, than internal financing … managers and investors to derive a model, which predicts that firms will never finance their investments …

Event studies in economics and financeEvent studies in economics and finance
www.jstor.org [PDF]
… 2.1. The pecking order of financing choices and bidder gains … considered to be more costly, in terms of adverse selection costs and transaction costs, than internal financing … managers and investors to derive a model, which predicts that firms will never finance their investments …

The interrelations of finance and economics: Theoretical perspectivesThe interrelations of finance and economics: Theoretical perspectives
www.jstor.org [PDF]
… 2.1. The pecking order of financing choices and bidder gains … considered to be more costly, in terms of adverse selection costs and transaction costs, than internal financing … managers and investors to derive a model, which predicts that firms will never finance their investments …

Value capture as a policy tool in transportation economics: an exploration in public finance in the tradition of Henry GeorgeValue capture as a policy tool in transportation economics: an exploration in public finance in the tradition of Henry George
onlinelibrary.wiley.com [PDF]
… 2.1. The pecking order of financing choices and bidder gains … considered to be more costly, in terms of adverse selection costs and transaction costs, than internal financing … managers and investors to derive a model, which predicts that firms will never finance their investments …

The normative economics of health care finance and provisionThe normative economics of health care finance and provision
www.jstor.org [PDF]
… 2.1. The pecking order of financing choices and bidder gains … considered to be more costly, in terms of adverse selection costs and transaction costs, than internal financing … managers and investors to derive a model, which predicts that firms will never finance their investments …



Q&A About Gain


What are some of the implicit costs included in an economic profit?

Opportunity cost and production cost.

Are realized gains taxed on net realized gains rather than gross gained?

Yes, net realized gains are taken into consideration for taxation purposes.

Is an accounting profit different from an economic profit?

Yes, accounting profits only relate to explicit costs while economic profits include implicit costs.

What is a gain?

A gain is an increase in the value of an asset or property.

How do you calculate net realized gains in stock transactions in a taxable account?

The difference between the (higher) sale price and purchase price after taking brokerage commissions into consideration.

In most jurisdictions, what are gains subject to capital gains tax?

Realized gains are subject to capital gains tax.

What is economic profit?

Economic profit is the difference between a firm's revenue and its opportunity costs.

What does a gain arise from?

A gain arises when the selling price of an asset is higher than the original purchase price.

Is a gain taxable or non-taxable?

A gain may be either taxable or non-taxable.

How do economists view normal profits and economic profits differently?

Normal profits are viewed as necessary for covering all of a firm's explicit costs while economists also consider that normal profits should cover all of a firm's implicit costs too.

Who uses normal profits and economic profits together?

Economists often use both normal profits and economic profits together when analyzing firms' performance.