What is a capital asset?
Capital asset means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include 1. Stock-in-trade 2. Personal effects such as jewellery, furniture, motorcar held for personal use. 3. 61\2 % Gold Bonds, 1977. 4. 7% Gold Bonds, 1980. 5. National Defence Gold Bonds, 1980. 6. Special bearer Bonds 1991 7. Gold deposit Bonds under the gold deposit scheme, 1999 notified by the central government.
Capital assets are tangible property that is likely to remain in the possession of the owner for an extended period time. Generally, these more or less permanent assets are used to provide permanent housing for the owner, or are utilized as part of a revenue generating process, such as the operation of a business. A capital asset includes a wide range of assets that are considered to be desirable and of immediate use or worth to the owner. The assets are also expected to be in use for a long period of time. Most often, a capital asset is thought of as an asset that can be touched and used daily. Land and buildings are excellent examples of a capital asset. Real estate in general, from residential dwellings to commercial office buildings or manufacturing plants, would all qualify as a capital asset. Along with buildings and land, a capital asset can also be any type of equipment that is used in the operation of a business. Machinery that is used in a manufacturing plant would be conside
A capital asset is basically all assets (whether or not connected to a trade or business) except for the following items: 1. Stock in trade and other inventory property of the taxpayer; 2. Property held primarily for sale to customers in the ordinary course of business; 3. Depreciable property and real property used in a trade or business; 4. A copyright, a literary, musical, or artistic composition, a letter or memorandum, or similar property, held: (a) by a taxpayer who created the property; or (b) in the case of a letter or memorandum, by a taxpayer for whom the property was prepared or produced; or (c) by a taxpayer whose basis in the property is determined by reference to the basis of those who created it or for whom the property was prepared; 5. Accounts and notes receivables acquired in the ordinary course of business for services provided or for sale of stock in trade, inventory, or property normally held for sale to customers; 6. United States government publications that are
