[hopefulcpa28]

I’m always confused between these two?

The way I’m understanding is that:

Capital Assets: Real & Personal property that are for personal use

Non-Capital: Real & Personal property that are held/used for business.

Am I right? Does anyone have better way of understanding/explaining it?

[Anonymous]

The link below has been very helpful for me to understand capital and noncapital assets better.

https://www.irs.gov/publications/p544/ch02.html

[Fikryshayeb]

I am seeing that respondents are not being clear enough or structured in their answers and that could be frustrating for learners.

Simply said in taxation science:
Capital Assets are assets held for personal consumption or for investment purposes.(personal car, furniture, stocks, partnership interest..)
Non Capital Assets are assets held in the normal course of business or trade. (inventory, machinery, building used as a warehouse ..)

For patents in particular, if they were bought as an investment, where the investor gets a return through royalties or some other way, it would be a capital assets as all investment assets are capital assets.

On the other hand if the patent was created in the normal course of business to aid the business in its production, that would be non-capital asset as it is generated and used in the normal course of business.

[Author]

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