IRS Code 1221 (Links to an external site.)Links to an external site. defines Capital Asset, but it does not give us a clear definition of what capital asset is; it defines capital asset by stating what is NOT a capital asset. Thus, a capital asset is anything that is not listed on the definition. Please review the code IRC Code 1221 (Links to an external site.)Links to an external site. and answer the following questions:
1. What is the benefit of classifying an assert as a Capital Asset?
2. Under IRC 1221(a), it list some items that are NOT capital assets. What do they have in common?
3. Provide you general understanding of Capital Assets?