The IRS capital gains tax is applied to any and all of the profit an individual makes on any capital asset. If you receive pleasure from it, convenience, or a profit, it is considered a capital asset. This includes homes, cars, bikes, recreational vehicles, stocks, and bonds.
The tax is applied when one of these capital assets are sold. There is no upper limit to the amount of profit you gain from a capital asset when it comes to reporting it on the capital gains tax sheet or schedule D, but your losses are limited to $3000 a year.
What most people do not realize is this tax also applies to inherited items. If you received something of value from a relative and decide to sell it, the profit you incur when the transaction takes place is all taxable and has to be reported by law. If the inherited item is stocks in a company, this is considered a capital gain, along with the coin collection.
When an item is sold, the length of time that you owned it is considered into the tax. All items that are held for less than a year are taxed at a higher rate than those considered a long term capital asset. Long term capital assets are items that are held for over 365 days or one year.
If your losses total more than $3000 in one year, the remaining amount can be added to the next year's income tax return, but limited again to only $3000.
The IRS capital gains tax is a way for the government to profit from the wealth of Americans to increase their tax collections.
Of course, the above is not legal or accounting advice - it is for informational purposes only. Before making any decisions regarding legal or tax matters, it is vital that you consult a licensed professional lawyer or tax accountant.
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