SIE practice questioneasyCapital Gains Holding Period
To qualify for the lower long-term capital gains tax rate, an investor must hold an asset for more than:
- A9 months
- B12 months✓ Correct answer
- C6 months
- D18 months
Explanation
Why B — 12 months
To qualify for long-term capital gains treatment, an asset must be held for more than 12 months (one year). Assets held for 12 months or less are considered short-term and are taxed at ordinary income rates, which are generally higher. The holding period begins the day after purchase and includes the day of sale.
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