Capital Asset Defined
Learn which types of property are and aren't capital assets.
In this lesson, we'll explore the definition of a capital asset under the Internal Revenue Code, or IRC. IRC Section 1221(a) defines a capital asset as any property the taxpayer holds, whether or not connected with the taxpayer's trade or business. That provision also excludes specific types of property from the definition of capital asset. They are:
· the taxpayer's stock in trade or inventory;
· property held primarily for sale to...