GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

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Recognized Gain or Loss


Synonyms:capital gain, capital loss, recognized gain, recognized loss
Filed Under: financial-banking, investments, taxation
Tags: banking, investment, taxes
 

Definition of recognized gain or loss

recognized gain or loss
1. The amount of gain or loss you report for income tax purposes. You may be able to defer recognizing gain or loss on certain property exchanges, such as like-kind exchanges.

Related Terms and Acronyms:

  • capital gain (CG)   The profit made by the seller when real estate or other capital assets are sold. Capital gains are taxed more favourably than earned income. However, this can be dependent on your tax bracket and the length of time you owned the asset before it was sold. You could pay approximately one-third to one-half less tax than you would pay on the same amount of earned salary.
  • capital loss   When an asset is sold for less than what you paid, or less than its adjusted basis, it is a capital loss. However, when it comes to taxes a capital loss is not always bad because you can use it to reduce the amount of income being taxed by the amount of the loss, up to $3,000 per year. If your loss is more significant, the excess (or capital loss carryover) can be carried forward indefinitely until the total loss is used.
  • exchange   A trade of property for other property or services. Like-kind property exchanges are a popular tax-deferral strategy.
  • income   The money earned in a specific time period.
  • loss   When expenses are larger than revenues.
  • net income (NI)   The difference between effective gross income and expenses. The term is qualified as net income before depreciation and debt.
  • passive activity   An activity in which a person does not materially participate such as real estate rentals and limited partnerships.
  • passive loss   Loss from a passive activity. Passive loss rules limit the amount of passive loss you can deduct to the total of your other income from passive activities.
  • profit   When revenues exceed expenses.
  • tax deferral   The postponement of taxes to a later year, usually by recognizing income or a gain at a later time. Remember, this only delays your tax liability; it doesn't eliminate it.

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