Financial Planner

Answer: D - Business inventories, commodities derivatives, nor hedging transaction properties are considered a capital asset. The IRC defines capital assets by exception. Every asset is a capital asset unless it falls in one of the eight categories: business inventories, business accounts or notes receivable, business supplies, real or depreciable business property and intangible business assets subject to amortization, creative assets, U.S. government publications, commodities derivatives, or hedging transaction properties. The IRC considers capital assets for businesses are any assets held for long-term investment rather than active business use. Equity and creditor interests in other firms are capital in nature, as are self-created patents and goodwill. Capital losses can be deducted only to the extent of capital gains.