Income Tax Fundamentals 2020 (with Intuit Proconnect Tax Online)
Income Tax Fundamentals 2020 (with Intuit Proconnect Tax Online)
38th Edition
ISBN: 9780357108239
Author: Gerald E. Whittenburg, Martha Altus-Buller, Steven Gill
Publisher: Cengage Learning
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Chapter 4, Problem 1MCQ

All of the following assets are capital assets, except

  1. A personal automobile
  2. IBM stock
  3. A child's bicycle
  4. Personal furniture
  5. Used car inventory held by a car dealer

Expert Solution & Answer
Check Mark
To determine

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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Income Tax Fundamentals 2020 (with Intuit Proconnect Tax Online)

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