Which calculation is crucial for determining taxable capital gains?

The calculation of sales price minus purchase price is crucial for determining taxable capital gains because it directly measures the profit made from the sale of an asset. Specifically, when an individual sells an investment or capital asset, the capital gain is calculated by taking the amount received from the sale (the sales price) and subtracting the original cost of the asset (the purchase price). This method accurately reflects the increase in value realized upon the sale.

Upon calculating the capital gain, further adjustments may be made for any associated expenses or improvements to the asset, but the fundamental starting point is the difference between these two figures. This calculation forms the basis for reporting the gain on tax returns and ultimately impacts the amount of tax owed on that gain.

Other options provided serve different purposes in financial analysis or tax calculations but do not specifically pertain to assessing capital gains. For instance, total assets and net worth metrics provide broader views of financial health but do not reflect transaction-specific outcomes. Similarly, total income minus deductions relates to overall taxable income rather than the specific nature of capital gains from asset sales.