Are earnings from stocks and bonds subject to capital gains taxes?

In the financial world, a capital gain is a profit that results from the sale of a capital asset over its purchase price. Capital gains occur in real assets and in financial assets. Financial assets include stocks and bonds that are of our concern.

With an example, the answer of the above question can be resolved. Suppose you have purchased a stock 10 years back. Those stocks have grown-up in value over the years and at present you have decided to sell them. Your capital gain is the profit that you built in those stocks and includes the amount that is to be taxed.

It is a most unfortunate happening that you can’t avoid the capital gains tax altogether.  You have to pay taxes on this part of this profit. However, if you want to take a portion away, then you can transfer some of the stock to your children. In this case, you are eligible to transfer up to $11,000 in stock to your children, but this should be transferred as a “gift” and you don’t need to pay the capital gains tax. If you are getting married, your spouse can do the same thus you can double up on the exemption. So, in these ways you can be exempted from capital gains taxes even if you have earnings from stocks and bonds.

[tags]stock,bonds,capital gains taxes[/tags]