According to the United States Tax Code's any gain or loss from sale or exchange of a capital asset is a capital gain or loss. "Almost everything you own and use for personal or investment purposes is a capital asset. Examples are your home, household furnishings, and stocks or bonds held in your personal account."

A capital gains tax (CGT) is a tax placed on a taxpayer’s capital gains, which are profits from the sale of an asset that was purchased at a lower price. If the sale results in a loss then it is known as a capital loss. When a taxpayer sells items that were for personal use – such as a car or jewelry – any gain is taxable but losses are not deductible. However, if a taxpayer sells an item that was an investment any gain is taxable and any loss is deductible.