All of the following assets are capital assets, except
- A personal automobile
- IBM stock
- A child's bicycle
- Personal furniture
- Used car inventory held by a car dealer
Concept Introduction:
The term capital asset is used in the calculation of capital gain or loss of the taxpayer. A capital gain or loss is calculated on the sale of capital assets. The income tax law has given an exclusive definition ofcapital assets.
To choose:The assets not considered as capital assets.
Answer to Problem 1MCQ
e.
Explanation of Solution
Explanation for correct answer:
A used car inventory held by a car dealer is a stock in trade is not covered in the definition of a capital asset. Hence option e is correct.
Explanation for incorrect answers:
a. A personal automobile is covered in the definition of capital assets. Hence this option is not correct.
b. Shares or stocks are covered in the definition of capital assets. Hence this option is not correct.
c. A child’s bicycle is covered in the definition of capital assets. Hence this option is not correct.
d. Personal furniture is covered in the definition of capital assets. Hence this option is not correct.
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