The direct capitalization and discounted cash flow models are used primarily in income- producing commercial properties. Explain what net operating income is and what types of expenses are removed when calculating net operating income. Discuss the theoretical basis for the direct capitalization approach. Discuss the theoretical basis for the discounted cash flow basis.

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A: Hi student Since there are multiple questions, we will answer only first question.

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.