### Question
How does the law define investment asset?


### Answer
Under *26 U.S.C. § 457A*, **investment asset** is defined as:

> any single asset (other than an investment fund or similar entity)—



(I) acquired directly by an investment fund or similar entity,



(II) with respect to which such entity does not (nor does any person related to such entity) participate in the active management of such asset (or if such asset is an interest in an entity, in the active management of the activities of such entity), and



(III) substantially all of any gain on the disposition of which (other than such deferred compensation) is allocated to investors in such entity

#### Citation:
  - *26 U.S.C. § 457A*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter E-Accounting Periods and Methods of Accounting > PART II-METHODS OF ACCOUNTING > Subpart B-Taxable Year for Which Items of Gross Income Included**

