Capital gains are the money that an investor earns by buying and selling a stock. Specifically, it is the gain (or loss) that the investor makes by selling the stock. Capital gains can be calculated by subtracting purchase price from the selling price of the stock. An example of this would be if Bob buys a stock for $20 and then a year later sells the stock for $30. His capital gains would be $10 (selling price minus purchase price).
