What type of gains are classified as short-term?

The classification of short-term gains is based on the duration for which an asset is held before it is sold. Gains on assets held for one year or less are considered short-term because tax regulations in many jurisdictions, including the U.S., define short-term capital gains as those realized on assets that have been owned for one year or less. This classification is significant since short-term gains are typically taxed at the individual's ordinary income tax rate, which tends to be higher than the capital gains tax rate applied to long-term gains.

In contrast, gains on assets held for more than one year are classified as long-term, which benefits from the lower tax rate. Other choices refer to specific scenarios but do not satisfy the general criteria defining short-term gains. For instance, gains from personal property or commercial real estate may still focus on the duration of asset ownership to determine if they qualify as short- or long-term, rather than being an inherent classification themselves. Therefore, understanding the holding period is crucial for accurately categorizing gains and recognizing their tax implications.