Short-term gain.
In plain English
A short-term capital gain is what you make when you sell an investment for more than you paid after holding it for one year or less. The IRS taxes short-term gains as ordinary income, the same rates that apply to your paycheck, which can be much higher than the long-term rate. That single fact, the one-year line, is why holding period matters so much for taxes: sell a day too early and the same profit can cost you far more.
01Why it matters
Selling a winner before you have held it a full year can turn a lightly taxed gain into one taxed at your top income rate.
02The math, step by step
You buy a stock for 5,000 dollars and sell it 10 months later for 6,000 dollars. The 1,000 dollar gain is short-term, so it is taxed at your ordinary income rate, not the lower long-term rate.
03What this is NOT
A short-term gain is NOT taxed like a long-term gain. Long-term gains, on assets held more than a year, get lower rates; short-term gains are taxed as ordinary income.