Nuts and bolts of capital assets

Question 1

What defines what is a capital asset

Answer 1

1221a- exclusionary list. Must be property held by a taxpayer.

Question 2

in 1221a- cap asset def:

Answer 2

It’s a capital asset unless its listed

Question 3

What defines LTCA, STCA, and net capital asset

Answer 3

1222; 1-4 defines cap gains and losses

Question 4

Capital gain is:

Answer 4

Sale/exchange of a capital asset

Question 5

limited deduction on

Answer 5

capital loss- 1211b

Question 6

carryover for capital losses

Answer 6

1212b

Question 7

How to determine net capital gain

Answer 7

1h

Question 8

stock in trade is

Answer 8

inventory

Question 9

Inventory is taxed at

Answer 9

ordinary income rates

Question 10

Inventory can be clear cut or difficult- LAND ex

Answer 10

Land is generally a capital asset unless its sold in course of ordinary business (inventory)– developers

Question 11

Land held for investment is classic ex.

Answer 11

classic example of a capital asset

Question 12

subdividing land is

Answer 12

red flag for inventory

Question 13

when asset is difficult to discern use

Answer 13

totality of circumstances facts- test

Question 14

Factors for totality of circumstances facts test

Answer 14

1. Frequency of buying/selling
2. Advertise?
3. Subdivide?

Question 15

Can’t identify/classify by type of asset have to use

Answer 15

reason why they are holding it

Question 16

If sale to customer in ordinary course of business

Answer 16

not a capital asset.