Recognized Gain Law and Legal Definition

Recognized gain refers to a gain made as a result of selling one’s investment or asset. The gain made as a result of the sale, will be or will not be made taxable based on the law in every state. Thus the term recognized gain is used, when the investment or asset is sold at a price higher than its purchase price. The recognized gain received, should be reported for the purpose of calculating income tax. Accordingly, the recognized gain would be calculated by deducting the purchase price from selling price.