An individual experiences what if they sell an asset for less than they purchased it?

When an individual sells an asset for less than what they initially paid for it, they incur a capital loss. This term specifically refers to the financial loss that occurs when an asset's selling price is lower than its purchase price. Capital losses can result from various reasons, such as market fluctuations or the asset's diminished value over time.

In the context of taxes, capital losses are significant because they may be used to offset capital gains for tax purposes, reducing an individual's overall taxable income. This mechanism allows taxpayers to balance out their profits from other investments with the losses from others, providing a beneficial tax treatment.

Other terms like capital gain, market loss, and investment loss may describe various aspects of investment performance but do not specifically address the situation where an asset is sold for less than its purchase price. Capital gain refers to the profit made from selling an asset above its purchase price, while market loss and investment loss are more generalized concepts that do not have the same precise legal and tax implications as a capital loss.