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How to understand capital gains tax
Start at square one.
A capital gains tax is a tax on the profits from the sale of an asset. The asset could be virtually anything, such as a home, a piece of land, stocks, bonds, collectibles-even an intangible asset, like a trademark or a patent.
In this sense, capital just means money, and gains mean profit. Most people's income comes from wages, and that's mostly what ordinary income tax covers.