What is the definition of "capital gains"?

The definition of "capital gains" specifically refers to the profit made from the sale of an asset or investment. This profit is realized when the selling price of the asset exceeds its purchase price. For example, if an investor buys a stock for $100 and later sells it for $150, the $50 would be considered a capital gain.

In the context of taxation, capital gains can be short-term or long-term, depending on how long the asset was held before selling it. Short-term capital gains apply to assets held for one year or less, while long-term capital gains apply to assets held for more than one year, often benefiting from lower tax rates.

The other options do not accurately describe capital gains; they focus on different aspects of finance. Losses from depreciation pertain to asset valuation decline rather than profit. Income from interest or dividends relates to earnings from investments, not specifically their sale. Lastly, total income earned before taxes could include all income sources, without the specific context of profit from asset sales. Hence, the first option correctly encapsulates the concept of capital gains.