What typically happens when an asset is sold for more than it was purchased?

When an asset is sold for more than its purchase price, a capital gain is realized. This gain represents the profit made from the transaction, calculated as the difference between the selling price and the original purchase price. Realizing a capital gain has important implications for a person's financial situation, particularly regarding taxation.

When an individual sells an asset at a higher price than its acquisition cost, this increase in value reflects successful investment performance. Such gains are often subject to capital gains tax, which depends on how long the asset was held before sale—short-term or long-term capital gains rates apply based on the holding period.

Considering the other options helps clarify the concept further. Incurring a capital loss would only occur if the asset were sold for less than its purchase price, resulting in a negative financial outcome. Similarly, no tax implications occurring would not apply in situations where a capital gain is realized, as there are often tax obligations tied to such profits. Lastly, the statement regarding the asset's value decreasing contradicts the premise, as selling the asset at a higher price implies an increase in its perceived value over the time it was owned.

Thus, the correct answer highlights the financial benefit and tax implications associated with selling an asset for more than its purchase price.