Capital is defined as any asset that can appreciate in value or provide income. Capital income or gains is the income created from capital assets owned. The most common types of income from capital assets are asset appreciation, dividend payments on common stocks and interest income on bonds.
Gather information on your capital assets. You will need your most recent account statements from all accounts that have investments. This includes your savings and/or money market account, 401K, and personal portfolio.
Determine the income associated with each asset identified. For instance, you may own stock that pays a dividend of $500, bonds that pay interest of $100 every year, and preferred stock that pays $100 every year. You may also own rental property that earns a profit of $100 a month, and your retirement account may be up an average of 5 percent from the beginning of last year.
Sum all income amounts. Start with the appreciation in asset values and then add additional income identified in Step 2. Let's say the stock increased in value by $100, the bonds increased in value by $50, the retirement fund increased in value by $100, and the real estate increased in value by $5,000; however, there was no change in the value of preferred stock. The calculation is: $100 + $50 + $100 + $5,000 + $500 + $100 + $100 + $100 (12) = $7,050.
