Every gain or loss realized on the disposition of property is ultimately characterized as either ordinary or capital for tax purposes.

Question

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This is a fundamental principle of tax law in the United States. Gains or losses from the sale, exchange, or other disposition of property are classified as either ordinary income or capital gains/losses, depending on the nature of the property and the circumstances of the transaction. Ordinary income is typically taxed at higher rates than capital gains, so the classification of a gain/loss can have a significant impact on a taxpayer's tax liability.

Every Gain or Loss Realized on the Disposition of Property