Definition: A capital asset is property within the federal tax law's capital-asset category, generally including property held for personal use or investment but excluding specified categories.
Example
Land held solely for investment is generally a capital asset.
Keep the distinction clear
Not every valuable business item is a capital asset for tax purposes. Inventory and depreciable property used in a trade or business have different classifications, even when their sale may receive special tax treatment.
Related terms
Asset · Capital Gain · Adjusted Basis
Keep studying
Real Estate Capital Gains: Basis, Profit, and Home-Sale Exclusions
References: IRS Publication 544: sales and dispositions of assets
Pronunciation (US): KAP-ih-tuhl AS-et (capitals show stress)
Pronunciation reference: Merriam-Webster
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