What you receive after you have sold any type of asset. The amount realized could be in the form of cold, hard cash or it could be the value of a piece of property that you received in the deal. It can also include any of your liabilities the buyer might assume.
Let’s say you decide to sell a house that you have paid off, but have fallen behind on your property taxes. So a house flipper offers to buy your house for $85,000 and will pay your back taxes of $10,000. You will then have a total amount realized of $95,000. Commissions and other fees are not included when you calculate the amount realized.
Related or Semi-related Video
Finance: What is Capital Gains Distribut...21 Views
Finance a la shmoop what are capital gains distributions? cap gains app
hap-happy day.. your mutual fund invested a hundred grand in whatever.com it then [Mutual fund appears]
was bought by Google for three hundred grand
three years after you invested at least that was your portion that three hundred
grand well you had a gain of two hundred grand
on your investment and because Google paid cash not stock in acquiring
whatever.com on your books the gain was realized ie turned into cash so then the
mutual fund has to distribute to you that capital gains ie the cash it [Capital gains definition appears]
realized in selling the company to the kindly loving people at Google whose
motto is do only a little bit of evil right so one more time for the people in
the back how does this capital gains distribution thing work well the fund
manager looking out for your mutual fund may sell or buy some of the stocks or [Fund manager appears with stocks and bonds]
bonds in your fund if she sells and makes a profit well then that profit or
the proportionate gains part of it has to be distributed to the fund holder and
that's you and then of course you got to pay taxes
on that distribution if your fund is held in a normal account like it's in a
401k or an IRA you'll pay taxes on it later but not right away and if you own
it personally well you'll pay at that year yeah Uncle Sam always needs to get [Uncle Sam appears]
his cut when there's capital gains distribution if he doesn't he gets angry
and you know you wouldn't like Uncle Sam when he's angry [Uncle Sam turns into Hulk]
Up Next
What is Arbitrage? Arbitrage is a trading strategy used to make risk-free money. The investor buys a security in one market and sells it in another...
What is Capital Gains Tax? Capital gain taxes are taxes collected by the IRS on trading profits from investments in equities, real estate, or any o...
What is ordinary income versus long-term gain income? Hit play to find out.
What is real estate tax? Depending on the state in which you reside, real estate and property are subject to state and municipal taxes, which are c...