when an asset is sold a realized profit is achieved and the firm predictably sees an increase in its current assets and a gain from the sale the realized gain from the sale of the asset may lead to an increased tax burden since realized gains from sales are typically taxable income this is one drawback of selling an asset and turning an unrealized paper gain into a realized gain 
in most business cases companies do not incur any tax until a realized and tangible profit occurs realized vs unrealized gainswhile realized gains are actualized an unrealized gain is a potential profit that exists on paper resulting from an investment it is an increase in the value of an asset that has yet to be sold for cash such as a stock position that has increased in value but still remains open a gain becomes realized once the position is sold for a profit 