Question

Which statement accurately describes the difference between short-term and long-term capital gains in terms of taxes? A. Long-term capital gains are from investments that have been held for more than one year and are taxed at a lower rate than short-term capital gains. B. Long-term capital gains are from investments that have been held for at least six months and are taxed at a lower rate than short-term capital gains. C. Long-term capital gains are from investments that have been held for more than one year and are taxed at a higher rate than short-term capital gains. D. Long-term capital gains are from investments that have been held for at least six months and are taxed at a higher rate than short-term capital gains.

Answer 1

Answer: A. Long-term capital gains are from investments that have been held for more than one year and are taxed at a lower rate than short-term capital gains.

Step-by-step explanation:

Long-term capital gains are indeed from investments that have been held for more than a year as opposed to short term gains from investments of less than a year. This means that long term gains can come from investments such as stocks and bonds.

Long-term capital gains are taxed at a lower rate than short term gains with most long term gains being taxed at 15% or lower. This is in contrast to short-term gains that are taxed at the same rate as ordinary income which means it could go up to as high as 37%.