Glossary entry (derived from question below)
English term or phrase:
hidden capital gain
English answer:
realised capital gain but not cashed in yet
Added to glossary by
zax
Sep 8, 2006 05:56
18 yrs ago
5 viewers *
English term
hidden capital gain
English
Bus/Financial
Finance (general)
While the relief procedures are the same, there is the additional advantage that hidden capital gains and profits on which tax has been deferred are not taxed, since no change is made to the accounts and it is still possible to tax capital gains at a later stage.
Responses
Responses
+1
1 day 3 hrs
Selected
realised capital gain but not cashed in yet
for example, you baught a house or a stock for $x. A year later it was valued at $2x. You made $1x in hidden capital gain. Once you sell your house or your stock, this hidden capital gain ceases to hidden and becomes taxable.
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Note added at 1 day3 hrs (2006-09-09 09:15:05 GMT)
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to be hidden
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Note added at 1 day3 hrs (2006-09-09 09:15:05 GMT)
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to be hidden
4 KudoZ points awarded for this answer.
14 mins
Hidden capital gains and profits means Thay are Exempt from income tax
http://www.reference.com/browse/wiki/Capital_gain
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Note added at 18 mins (2006-09-08 06:15:06 GMT)
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No taxes are paid on the capital gains and profits so they are called "hidden".
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Note added at 18 mins (2006-09-08 06:15:06 GMT)
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No taxes are paid on the capital gains and profits so they are called "hidden".
Peer comment(s):
disagree |
Tony M
: NO! It doesn't mean they are EXEMPT from tax, just that they are kept from showing in the accounts in such a way that they are taxable at a later date, instead of right away. / YES I DID!
10 mins
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DID YOU READ THE LINK?
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agree |
sigmalanguage
: I don't think this is a normal usage of the word "hidden", but this is probably what it means in this context. I would like to draw everyone's attention to the expression "deferred", so the gains are recognized. They are sort of "hidden" from taxation.
6 hrs
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+4
1 hr
capital gain posted on accounts not considered in gain calculation
Mine is very contextual interpretation. Later on, the aforementioned relief procedures will move the gain into more visible accounts. That is why the gain is not taxed now, but taxable at later stage.
Peer comment(s):
agree |
Tony M
: Exactly for the interpretation; I'm not qualified to comment on the expression...
1 hr
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Thanks Tonny. Hope the expression gets better next time. :)
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agree |
Fabio Descalzi
: Baik baik!
6 hrs
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Terima kasih...
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agree |
Alfa Trans (X)
10 hrs
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Thank you Marju.
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agree |
Lubosh Hanuska
2 days 5 hrs
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Thank you webguru.
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+4
2 hrs
is a gain on an asset that is either not disclosed
or (deliberately) understated in financial statements.
It is a departure form standard accounting practice since it implies that the financial statements do not give a true and fair view of the entity's financial position. Once such an asset is disclosed, and/or recognised at its fair value, or sold, the resultant difference is a gain that may or may not be taxable in due course, depending on the tax lesgislation in force in the jurisdiction concerned.
It is a departure form standard accounting practice since it implies that the financial statements do not give a true and fair view of the entity's financial position. Once such an asset is disclosed, and/or recognised at its fair value, or sold, the resultant difference is a gain that may or may not be taxable in due course, depending on the tax lesgislation in force in the jurisdiction concerned.
Peer comment(s):
agree |
Tony M
: That's the way I see it too!
58 mins
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Thank you
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agree |
Dave Calderhead
58 mins
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Thank you
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agree |
Lucica Abil (X)
3 hrs
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thank you
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agree |
Mwananchi
4 hrs
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thank you
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neutral |
sigmalanguage
: This is the usual meaning, but a problem is that if the gain is not shown on any document, tax authorities can never tax it. So no question should arise as to whether to tax it or not. In addition, you don't say "deferred tax" when there is no tax.
5 hrs
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Tax is effectively delayed until recognition of the asset at its fair value or its sale, resulting in any capital gain (or loss) being recognised as well. My choice of the term 'deferred' was a little unfortunate.
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