Section 1221

Section 1221 means:
the part of the Internal Revenue Code that defines a capital asset.

Actually, it states what is not a capital asset, including the following: • inventory.

• receivables collected in the course of business.

• copyrights and the like held by the creator or certain other parties.

• certain U.S. securities.

Though Section 1221 does not specify what a capital asset is, the following are considered capital assets:

• the personal residence that the taxpayer owns.

• raw land held as an investment.

• stocks, bonds, and mortgages held as investments.