Definition ∞ An unrealized gain tax is a levy on the increase in value of an asset that has not yet been sold or exchanged. This tax applies to assets that have appreciated in value on paper, but where the owner has not yet converted that gain into cash. It differs from capital gains tax, which is typically applied only upon the actual sale of an asset.
Context ∞ The concept of an unrealized gain tax is a contentious topic in the digital asset space, particularly concerning long-term cryptocurrency holdings. Debates often question the practicality of asset valuation and the potential liquidity challenges for taxpayers. Future policy discussions may explore various approaches to taxing digital asset wealth, potentially including forms of unrealized gain taxation.
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