[nib]

Hello friends ,

Please help me to understand , why not “”.Novel copyright held by the author “””” is capital asset ? because it personal property.

whereas Mineral deposits sold in place is used for business .

Which of the following is considered capital assets for tax purposes?

A.Inventory

B.Land used in a business

C.Novel copyright held by the author

D.Mineral deposits sold in place

Correct answer= D.

EXPLANATION=Mineral and similar natural resources deposits are considered to be capital assets when sold in place. The sale of mineral deposits, which are removed and sold in units, results in ordinary income. Copyrights held by the creator are not capital assets; however, purchased copyrights are capital assets. Inventory and land used in a business are specifically excluded from the definition of capital assets.

[Anonymous]

From the online definition of Capital Asset:
For firms, a capital asset is an asset that has a useful life longer than one year and is not intended for sale during the normal course of business. For individuals, capital asset typically refers to anything the individual owns for personal or investment purposes.
The buzz words are:
Individuals—
-For personal use
-Investment purposes
Businesses—
-To yield interest/profits

If you’re an ordinary TP, your car, your appliances at home, those are your capital assets. However, if you buy a land or any property to start up a business, then they are NOT considered capital assets.
Let’s say the novel copyright held by J.K Rowling, author of Harry Potter, it is not a capital asset because she has made tons of money out of that novel. The copyright is for business, not for personal nor investment purposes.

Mineral deposits sold in place, are classified as capital assets because they were acquired for investment purposes. It’s like when companies would invest their funds with stocks so they can trade or sell them for profits later.

[Author]

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