Why realized gain matters
Realization converts market appreciation into a recorded result and may trigger tax, distribution, or reporting consequences.
How it is applied
Investors calculate net proceeds less adjusted basis for the selected lot and apply applicable currency and transaction rules.
Portfolio example
A lot with $5,000 basis is sold for $6,200 after costs, creating a $1,200 realized gain before tax treatment.
How to interpret it
Realized does not necessarily mean cash received immediately, and taxable recognition can differ.
Limitations and common misconceptions
Jurisdiction, account, derivatives, installment proceeds, wash sales, and fund structures complicate recognition.
Sources and further reading
- Publication 550: Investment Income and ExpensesU.S. Internal Revenue Service
- Dividends and Other Corporate DistributionsU.S. Internal Revenue Service