R2 M2- Gains & Losses

Question 1

What is a capital Asset?

Answer 1

Includes property held by the taxpayer for investment or personal use.

Question 2

Which of the following are capital assets?

I. Interest in a partnership
II. Accounts receivable
III. Stocks and bonds
IV. Inventory

A.	I, III, and IV
B.	Both I and III
C.	II only
D.	I, II, and III

Answer 2

Choice “B” is correct. A capital asset includes property (real and personal) held by the taxpayer for investment or for personal use.

Choices “A”, “C”, and “D” are incorrect because they include either accounts receivable or inventory, which are not capital assets.