The correct answer is: D. Compensation received on the termination of a contract
A capital gain is a profit that is realized from the sale of an asset that has increased in value over time. This can include assets such as stocks, bonds, real estate, and collectibles.
Option A is not a capital gain because it is a profit that is realized before the company is incorporated. This profit is considered to be ordinary income and is taxed at the ordinary income tax rate.
Option B is a capital gain because it is a profit that is realized from the sale of a fixed asset. Fixed assets are assets that are used in the business and have a useful life of more than one year. These assets include things like buildings, equipment, and vehicles.
Option C is a capital gain because it is a profit that is realized from the sale of shares. Shares are units of ownership in a company. When shares are sold, the seller realizes a capital gain or loss depending on the difference between the sale price and the original purchase price.
Option D is not a capital gain because it is compensation that is received for the termination of a contract. This compensation is considered to be ordinary income and is taxed at the ordinary income tax rate.