What type of gain does Ben incur when he sells the painting for a profit?

When Ben sells the painting for a profit, he incurs a long-term capital gain if he held the painting for more than one year before the sale. Long-term capital gains are typically taxed at lower rates than ordinary income, reflecting the incentive for long-term investment as part of tax policy.

In the case of collectibles such as paintings, if the asset was owned for more than a year, the gain realizes its classification as a long-term capital gain. This investment in the painting would need to demonstrate that Ben's holding period exceeded the one-year threshold to affirm the gain's long-term status.

Ordinary gains pertain to assets held for less than a year and are taxed as regular income. Short-term capital gains also apply to assets held for less than a year and are indeed taxed at ordinary income rates. An unrealized gain, on the other hand, indicates an increase in value not yet recognized through a sale, which would not be applicable since Ben has completed the sale. Therefore, the classification as a long-term capital gain aligns directly with how long Ben owned the painting before selling it.