realizedunrealized

Realizedunrealized is a term that is often used in finance and accounting to describe the paired concepts of gains and losses that arise from holding and disposing of assets. The term helps distinguish between amounts that have actually occurred through a completed transaction and those that exist only on paper while an asset is still owned.

Realized gains or losses occur when an asset is sold or otherwise disposed of. They are calculated as the sale proceeds minus the asset’s cost basis, adjusted for fees and taxes where applicable. Unrealized gains or losses reflect changes in the asset’s current fair value relative to its cost basis while the asset remains held; they are sometimes referred to as paper gains or paper losses.

Tax and accounting treatment differs by jurisdiction and framework. In many tax systems, only realized gains are taxed in the year of sale, while unrealized gains remain untaxed until realization. In accounting, how changes in asset values are reported depends on the instrument and standards in use; some assets record fair value changes in profit or loss, others in other comprehensive income, and some are disclosed in notes to financial statements. The cost basis and timing of realization influence reported income and performance metrics.

Investors monitor realized and unrealized figures to assess performance, manage risk, and plan taxes. Movements between unrealized and realized status can influence decisions to sell, hold, or rebalance a portfolio. Related concepts include realized gain, unrealized gain, cost basis, and the tax treatment of investment gains.