What term describes a gain on a capital asset held for a short period, usually one year or less?

The term that describes a gain on a capital asset held for a short period, typically one year or less, is known as a short-term capital gain. Short-term capital gains arise when an individual sells an asset, such as stocks or real estate, for more than its purchase price after holding it for a brief duration.

Short-term capital gains are usually taxed at the owner's ordinary income tax rate, which is often higher than the rate applied to long-term capital gains. Long-term gains, in contrast, are realized from assets held for more than one year and benefit from lower tax rates.

The concept of capital gains tax refers to the tax imposed on both short-term and long-term gains, but does not specifically define the one-year timeframe involved with short-term holdings. Similarly, tax loss carryforward pertains to the ability to apply a capital loss from one tax year to offset gains in future years, and is not related to the duration of asset holding or the specific gains realized. Understanding these distinctions is crucial for effective tax planning and investment strategies.