### Question
How does GENERAL RULES FOR DETERMINING CAPITAL GAINS AND LOSSES define capital asset?


### Answer
Under *26 U.S.C. § 1221*, **capital asset** is defined as:

> property held by the taxpayer (whether or not connected with his trade or business), but does not include—



(1) stock in trade of the taxpayer or other property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year, or property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business

#### Citation:
  - *26 U.S.C. § 1221*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter P-Capital Gains and Losses > PART III-GENERAL RULES FOR DETERMINING CAPITAL GAINS AND LOSSES**

