What is Taxable Gain?
Definition of Taxable Gain
Everything that is owned for the purpose of sale or investment brings along an increase in its value. There is always difference between the purchase and sale price. This benefit and increase in value is ‘taxable gain’.
Explanation of Taxable Gain
Taxable Gain = Sale Price – Purchase Price
In this case, sale price must be more than purchase price.
Suppose, a Company XYZ purchases 100 shares for $1 per share. After few months, share price increases to $5 and hence, the total selling price becomes $500. Taxable gain in this case would be calculated as follows;
$500 – $100 = $400