In the context of business, a gain is generally defined as an increase in the value of an asset or property. It occurs when the current price of something owned is higher than the original purchase price. Gains can be realized when an asset is sold at a profit, or they can be unrealized, also known as paper gains, which reflect an increase in value while the asset is still held¹.

For accounting and tax purposes, gains are often classified in several ways, such as:

• Gross vs. Net Gains: Gross gains refer to the total increase in value, while net gains take into account transaction costs and other expenses.
• Realized vs. Unrealized Gains: Realized gains are the profits received upon the sale of an asset, whereas unrealized gains are potential increases in value that have not yet been cashed in.
Short-term vs. Long-term Gains: This classification depends on how long the asset was held before being sold, which can affect the tax treatment of the gain.