Capital Gains Calculator

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Reviewed by: **Jennifer Lee, Enrolled Agent (EA)**
EA specializing in federal tax law, investment income reporting, and capital gains/losses.

The **Capital Gains Calculator** estimates the taxable profit or loss realized from the sale of an investment (e.g., stocks, real estate). Use this tool to solve for the missing variable: Acquisition Cost, Sales Price, Net Gain/Loss, or Adjusted Basis.

Instructions: Enter values for any three of the four core parameters (Buy Price, Sell Price, Cost Basis, Net Gain) to solve for the missing one.

Transaction Parameters

Acquisition Cost ($C_A$) – [P]

Selling Price ($P_S$) – [F]

Selling Expenses ($E_S$) – [V]

Net Capital Gain/Loss ($G_N$) – [Q]

Capital Gains Formula

Capital Gain/Loss ($G_N$) is calculated based on the difference between the Net Sales Price and the Adjusted Cost Basis ($C_{Basis}$):

Adjusted Cost Basis ($C_{Basis}$):

$$C_{Basis} = C_A + I_C$$

Where $I_C$ are improvements or closing costs added to the original acquisition cost ($C_A$). For simplicity, we assume $I_C = 0$ in the calculator input fields. The core gain formula is:

Net Capital Gain/Loss ($G_N$):

$$G_N = (P_S – E_S) – C_A$$ Formula Source: Internal Revenue Service (IRS)

Variables Explained (P, F, V, Q – Parameters)

$C_A$ (Acquisition Cost, $P$): The original price paid for the asset, plus any non-deductible closing costs.
$P_S$ (Selling Price, $F$): The gross amount received from the sale of the asset.
$E_S$ (Selling Expenses, $V$): Costs related to the sale (e.g., broker commissions, advertising, legal fees).
$G_N$ (Net Capital Gain/Loss, $Q$): The final calculated profit or loss, which is the amount subject to capital gains tax.

Related Investment & Tax Calculators

Analyze the full financial impact of your investments:

What is a Capital Gain?

A capital gain (or loss) occurs when you sell a capital asset (such as real estate, stocks, or bonds) for a price that is different from its adjusted cost basis. If the selling price, minus selling expenses, is higher than your cost basis, you have a capital gain (profit). If it is lower, you have a capital loss.

For tax purposes, capital gains are categorized into two types: Short-Term (assets held for one year or less) and Long-Term (assets held for more than one year). Long-term capital gains are typically taxed at lower rates than ordinary income, making the holding period a critical factor in investment strategy.

How to Calculate Capital Gains (Example)

Assume you bought stock for \$10,000 ($C_A$), sold it for \$15,000 ($P_S$), and paid \$500 in broker fees ($E_S$). We are solving for $G_N$:

Step 1: Calculate Net Sales Price
Net Sales Price = Selling Price – Selling Expenses = $\$15,000 – \$500 = \mathbf{\$14,500}$.
Step 2: Determine Adjusted Cost Basis
The Adjusted Cost Basis is the Acquisition Cost plus any improvements. Assuming zero improvements, $C_{Basis} = \mathbf{\$10,000}$.
Step 3: Calculate Net Gain/Loss ($G_N$)
$G_N = \text{Net Sales Price} – \text{Adjusted Cost Basis} = \$14,500 – \$10,000 = \mathbf{\$4,500}$.

The Net Capital Gain is $\$4,500$, which is the amount subject to capital gains tax.

Frequently Asked Questions (FAQ)

What is the difference between short-term and long-term gains?

Short-term capital gains are from assets held for one year or less and are taxed as ordinary income (at your highest marginal tax rate). Long-term capital gains are from assets held for more than one year and benefit from preferential, lower tax rates.

What is Adjusted Cost Basis?

The Adjusted Cost Basis is your original purchase price modified by certain events, like adding the cost of capital improvements (for real estate) or subtracting depreciation. It represents your total investment in the asset for tax purposes.

Can capital losses offset gains?

Yes. Capital losses can be used to offset capital gains dollar-for-dollar. If your losses exceed your gains, you can typically deduct up to \$3,000 (\\$1,500 if married filing separately) of the net loss against your ordinary income per year.

Does this calculator calculate taxes?

No. This calculator determines the **Net Gain/Loss** (the taxable amount). Calculating the actual tax due depends on your total income, filing status, and specific tax brackets, which are too complex for a simple four-variable solver.

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