Join Earl Kay Stice for an in-depth discussion in this video Capital gains vs. ordinary income, part of Accounting Foundations.
Let's talk about the two different kinds…of income out there.…There's ordinary income,…and there's capital gains income.…Ordinary income is just like it sounds,…it's ordinary income,…the wages that you get from the job…that you have, your salary.…Let's say you've got a savings account…in the bank, you earn interest.…That's ordinary income.…Dividends, you've got some investments,…you get some dividends.…That's all ordinary income.…Capital gains income is when…you make an investment.…Let's say you buy a stock portfolio,…and hopefully you're going to buy low…and sell high.…
Let's say I buy at $1,000 and sell at $1,300.…That $300 that it went up,…that's called capital gains income.…So there's ordinary income; wages, salary,…interest dividends.…And there's capital gains income,…income from investments.…Worldwide and particularly in the United States,…capital gains income is typically taxed…at a lower rate.…Now we could get in a long philosophical discussion…about whether this is right or wrong.…Let me just give you the rationale on both sides.…
- What is accounting?
- Working with balance sheets and income statements
- Determining the costs of products
- Performing break-even analysis
- Determining average and marginal tax rates
- Understanding tax deductions and credits
Skill Level Appropriate for all
1. Basics of Accounting
2. Financial Accounting
3. Managerial Accounting
4. Income Taxes
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