Gains on a life company bond are considered what type of income?

Gains on a life company bond are classified as investment income. This arises from the nature of life company bonds, which are financial products primarily used for savings and investment purposes. When an individual holds a life company bond, they are essentially investing in a financial instrument that accumulates value over time, typically resulting in capital appreciation.

Investment income encompasses earnings derived from investments, such as dividends, interest, and realized gains from the sale of investment assets like stocks and bonds. In the case of life company bonds, the growth in value due to interest accumulation and any gains realized when the bond matures or is surrendered falls under this category.

While capital gains income relates to profits earned from the sale of an asset, it is more specific to gains realized from the sale of capital assets, like stocks or real estate. Life company bonds are structured more like investment products rather than assets meant for trading, which contributes to their classification as investment income.