Capital Assets: A Guide for the Novice, with Tips for the Experienced

Posted: 22 Jun 2016

See all articles by Erik M. Jensen

Erik M. Jensen

Case Western Reserve University School of Law

Date Written: June 2016

Abstract

This article discusses what is usually thought of as a routine issue, but which many people, including at least some tax professionals, get wrong: What is a capital asset for federal income tax purposes? For one thing, the term covers lots of property that almost no one thinks of as a capital asset, like your underwear. On the other hand, despite what many think, the machinery you use in your business and the land on which your factory sits aren’t capital assets. The article considers these characterization issues, and, most important, discusses what difference it can make whether an item is a capital asset or not.

Keywords: Capital asset, depreciation, property held for the production of income, property used in the trade or business, Section 1231 property

Suggested Citation

Jensen, Erik M., Capital Assets: A Guide for the Novice, with Tips for the Experienced (June 2016). 33 (4) Journal Taxation of Investments 47 (2016); Case Legal Studies Research Paper No. 2016-20. Available at SSRN: https://ssrn.com/abstract=2798861

Erik M. Jensen (Contact Author)

Case Western Reserve University School of Law ( email )

11075 East Boulevard
Cleveland, OH 44106-7148
United States
216-368-3613 (Phone)
216-368-2086 (Fax)

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