Gain on the sale of a capital asset. Assets held for a long term often receive lower tax rates than ordinary income on the capital gains.
Example: Meaghan buys an investment property for $200,000 from which she earns ordinary income of $10,000 annually. After three years, she sells the property for $240,000. The $40,000 gain on sale is reported as a long-term capital gain on her tax return and is taxed at a rate that is less than the tax rate on the rental income she had earned earlier.