Which of the Following Items Is Not a Capital Asset

question 5

Multiple Choice

Which of the following items is not a capital asset in the hands of the taxpayer?

• A)Taxpayer has a set of wrenches he uses to work on his personal auto.
• B)Taxpayer has a $6,000 wedding dress she keeps as a remembrance of her wedding.
• C)Taxpayer owns city of Topeka bonds.
• D)Taxpayer is an amateur golfer but has a set of championship golf clubs
• E)All of the above items are capital assets.

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Definitions:

Ordinary Perpetuity

A series of indefinite cash flows that occur at regular intervals.

Ordinary Annuity

A financial product where payments of a fixed amount are received at the end of equal intervals.

Nominal GNP

Gross National Product measured in current prices, without adjusting for inflation.

Fair Market Value

Fair Market Value is the price at which an asset would trade in a competitive auction setting, reflecting the amount a willing buyer would pay to a willing seller.