These gains don't cause pain. A capital gain is the amount of money you pocket by selling one of your investments for more than you paid for it. Technically, capital gains only count for what's called a capital asset, but that's really just anything you own for investment purposes. Stocks and bonds obviously qualify, but your house and household furnishings can also count.

For tax purposes, capital gains are classified as either long-term (held for more than one year) or short-term (held for less than one year) and there are different tax implications for how long you hold onto a capital asset. For most long-term capital gains, you're taxed no more than 15% of the value of the asset. Short-term gains get taxed as regular income, so you pay the rate for the tax bracket you're in.

Capital gains can also be realized or unrealized. When you physically sell an asset like a stock, you've realized the capital gain. When you're holding the stock, and it has a value over its purchase price, but you're not selling it, you've got an unrealized gain, and you won't realize it until you sell.

In a perfect world, we'd all have capital gains. But no one¿s that smart or lucky. When the value of an asset at sale is below what you've paid for it, it's called a capital loss. The good news is that the government lets you count that loss against any gains you've had, lowering the taxes you pay. In fact, many people who sell a stock that has risen far over their purchase price tend to sell some stinkers, too, at the same time for the tax benefit. This is known as a capital-loss offset.

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Sunday, September 28, 2008

European Governments Step In to Save Finance Firms

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Ken Sweet

FOXBusiness

Two European financial institutions -- Dutch-Belgian bank Fortis and U.K. mortgage lender Bradford & Bingley -- had to be at least partially nationalized over the weekend, as the global credit crunch continued to take it toll.

Belgian Prime Minister Yves Leterme announced that Fortis will be partially nationalized to prevent it from falling victim to the credit crisis. That development, reached late Sunday, has the governments of Belgium, the Netherlands and Luxembourg putting EUR11.2 billion (US$16.3 billion) into the bank. It also forces Fortis to sell its stake in Dutch bank ABN Amro.

Like many financial firms in the past few weeks, Fortis has suffered from a crisis of confidence among investors. Shares fell 28% in the past week. The bank replaced its chief executive on Friday and has tried to reassure investors that it isn’t suffering from liquidity issues.

A spokesperson for Fortis was not immediately available for comment.

Meanwhile, mortgage lender Bradford & Bingley is going to be fully nationalized by the U.K. government, according to various media reports Sunday. Reuters said the U.K. is discussing the sale of B&B's book of business, citing a person familiar with the matter.

British Treasury Minister Yvette Cooper told the BBC that deposits at B&B would be guaranteed by the U.K. government, but stopped short of saying the bank would be nationalized.

The BBC reported that the savings business would be transferred to Spanish banking giant Santander (STD).

B&B, which provides loans to landlords to build rental properties, saw its stock price fall 28% in the past week alone.

This is the second time in the past year that British authorities have had to intervene directly in the U.K.’s financial sector. In February, the U.K. government nationalized Northern Rock after the mortgage lender could not find a buyer for the bulk of its assets.

A spokeswoman for B&B said the firm would not comment until the Treasury announces its plan for action.