Capital Gains

A holding that has risen in value carries an unrealized gain, which is a number on a screen. It becomes a capital gain when the shares are actually sold. Until then nothing has been realized, nothing is owed, and the figure can still go back down as easily as it went up.

In the United States the tax treatment turns on how long the shares were held. Gains on holdings of a year or less are taxed as ordinary income; gains on holdings kept longer than a year fall under a separate long-term rate. The exact rates depend on income and change with legislation, and accounts such as an IRA follow different rules again.

None of that is tax advice, and none of it is universal: other countries treat investment gains differently, and an individual's own circumstances decide the answer. The term is here because it appears on brokerage statements and in every conversation about selling, and knowing what it refers to is a separate thing from knowing what it costs.