Q:
What is capital income?
A:
Quick Answer
Capital income is income generated by an asset over time, rather than from work done using the asset, according to Investopedia. If a farmer buys land for a certain amount of money and sells it at a profit after one year, the difference in the prices is capital income.
Continue Reading
Credit:
Jeff Swensen
Getty Images News
Getty Images
Full Answer
Capital income, also known as capital gains, can only be realized after an asset is sold, according to Investopedia. In contrast, if an asset is sold at a lower price than it was bought for, the result is a capital loss. In the United States, tax exemptions exist on assets such as common stock holdings to encourage investment, according to the IRS.
Learn more about Financial PlanningSources:
Related Questions
-
Q:
What is the difference between calls and puts?
A: A call option provides an investor with the right to purchase an asset such as a stock, commodity or bond at a specified time during a specified time perio... Full Answer >Filed Under: -
Q:
What is net working capital?
A: Net working capital is the amount of liquid assets a company uses to fund operations and growth, as Accounting Tools reports. The more assets are available... Full Answer >Filed Under: -
Q:
What is a replicating portfolio?
A: A replicating portfolio is a collection of assets that are put together to match a target asset. The portfolio is designed so that the changes in value of ... Full Answer >Filed Under: -
Q:
What is an asset protection trust?
A: An asset protection trust is a vehicle an individual establishes to protect his assets from creditors. The domestic asset protection trust is established b... Full Answer >Filed Under:
