The IRS taxes capital gains based on short-term and long-term holdings. Short-term capital gains are taxed on assets sold within a single year of ownership while long-term gains are taxed on the sale of assets held for more than 12 months. Short-term capital gains are treated as ordinary income, which means you could be taxed as high as 37% based on your tax bracket. Long-term gains, on the other hand, are only subject to a tax of  0%, 15%, or 20%. The rate depends on your adjusted gross income and filing status.