Ordinary Income and Capital Gains

Ordinary Income and Capital Gains

Ordinary Income

Ordinary income is characterized as the income that is not classified as capital gain. Ordinary income consists of salaries, wages, commissions, bonuses, dividends and other types of income.

Short term Capital Gains

Short term capital gain is the gain that you get from selling an asset that you held for one year or less. These are taxed as ordinary income (Reinhardt, 2012).

Long term Capital Gains

Long term capital gain is the gain that you get from selling an asset that you held for more than one year. These are taxed according to the ...