Question

For an individual business owner, which of the following would typically be classified as a capital asset for federal income tax purposes? a. Marketable securities. b. Inventory. c. Machinery and equipment used in a business. d. Accounts receivable.

Answer 1

Answer:

a. Marketable securities

Explanation:

A(correct one). Capital assets are able to cover all marketable securities unless the taxpayer becomes a dealer.

B -incorrect. The inventory is not such as capital although it is asset. It is fixed asset type

C-incorrect. The assets which are depreciable must be excluded from capital assets group. Because they will be fixed ones again.

D-incorrect. Accounts receivable of a business are excluded from the definition of capital assets. because they are the other section of accounting elements and not considered as asset at all.