Quote:
Originally Posted by d-ray657
If you sell something for more than you paid for it, is it not a profit? I.e., is not a capital gain a profit?
Regards,
D-Ray
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In an investment sense, yes. Profits from investments are always "realized capital gains."
In a production environment, not always. Manufacturers must capitalize all direct and indirect costs of production. This includes all material costs, amounts paid to employees directly involved in manufacturing, as well as a portion of salaries for employees not directly involved. Also included are expenses incurred for indirect supplies, repairs and maintenance, rent and utilities, even if incurred before and after the actual production of the property. All capitalized costs will reduce the amount of profit that is recognized when the property is sold.