Question

What are some capital assets that you have (list 10 that are not securities)? How would you be taxed on each asset if you were to sell it today?

Answer 1

A capital asset includes any type of  property of any kind tangible or intangible , movable or immovable held by an assessee, whether or not connected with their business or profession ,it includes the assets owned for personal use. Capital assets generally have a useful life of more than one year and which are not meant to be sold during the regular course of operations of the company

the ten Capital Assets are as follows:

securities,Land ,a residence, household furnishings, a personal car, coin and stamp collections, gems and jewelry, art and collectibles and precious metals.

Individuals pay  federal income tax on the net total of all their capital gains. The payable tax rate is dependent upon the individuals tax bracket and the amount of time the investment involved.  A capital gain is realized when a capital asset is sold or exchanged at a price higher than its basis.

Short-term capital gains earned by the individual from Short term capital assets i.e Capital assets held for a year or less before being sold , such gains are taxed at the investor's ordinary income tax rate at rates up to 37 percent . While as Long-term capital gains, are earned on the dispositions of assets held for more than one year, are taxed at a lower rate up to 20 percent.

There are some  rules to be followed for  certain types of capital gains.

Up to $250,000 ($500,000 for married couples) of capital gains earned from the selling of the principal residences is tax-free however the taxpayers is required to meet certain conditions for availing such benefit including having lived in the house for at least 2 of the previous 5 years.

Gains earned by an individual on art and collectibles are taxed at ordinary income tax rates up to a maximum rate of 28 percent.

As per federal income tax ,  Up to the greater of $10 million of capital gains or 10 times the basis on stock held for more than five years in a qualified domestic C corporation with gross assets under $50 million on the date of the stock’s issuance are excluded from taxation.Also capital gains from investments held for at least 10 years in designated Opportunity Funds are excluded from taxation. For availing partial exclusion Gains on Opportunity Fund investments held between 5 and 10 years are eligible .