Capital Assets in United States

Practical Information

Note: Some of this information was last updated in 1982

Under the capital gain and loss provisions of the federal income tax law, a capital asset is any prop , erty held by the taxpayer, except:

(a) Property held primarily for sale to customers or property that will physically become a part of merchandise intended for sale to customers,

(b) Accounts or notes receivable acquired in the ordinary course of your trade or business for services rendered or from the sale of any properties described in (a),

(c) Depreciable property used in your trade or business (even though fully depreciated),

(d) Real property used in your trade or business,

(e) A copyright, a literary, musical, or artistic composition, a letter or memorandum, or similar property created by your personal efforts; prepared or produced, in the case of a letter, memorandum, or similar property, for you; or acquired from a person who created the property or for whom the property was prepared, under circumstances entitling you to his or her basis (for example, by gift),

(f) U.S. government publications that you received from the government free or for less than the public sales price or that you acquired under circumstances entitling you to the basis of someone who received the publications free or for less than public sales price, if you sell, exchange, or contribute the publication, (g) Obligations of federal, state, and municipal governments issued on a discount basis and payable without interest at a fixed maturity date not more than one year from the date of issue. The term capital asset includes intangibles such as shares of stocks and bonds unless they fall under one of the exceptions mentioned.

(Revised by Ann De Vries)

What is Capital Assets?

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Capital Assets in State Statute Topics

Introduction to Capital Assets (State statute topic)

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Resources

Further Reading

• Information about Capital Assets in the Gale Encyclopedia of American Law.