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#taxes accountingstudent #cpaexam
Recognized gains and losses must be properly classified. Proper classification depends on three characteristics:
The tax status of the property (capital, § 1231, or ordinary).
The manner of the property’s disposition (sale, exchange, casualty, theft, or condemnation).
The holding period of the property (short-term: one year or less; long-term: more than one year).
Personal use assets and investment assets are the most common capital assets owned by individual taxpayers. Personal use assets usually include things like a residence, furniture, clothing, recreational equipment, and automobiles. Investment assets usually include stocks, bonds, and mutual funds. Remember, however, that losses from the sale or exchange of personal use assets are not recognized.
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