Which of the following are Section 1231 assets? Explain. Assume all the items have been held...

Which of the following are Section 1231 assets? Explain. Assume all the items have been held long-term.

Machinery used in the business
Personal home
Factory building
Land held as an investment
Land used in a business
Shares of stock in Jones Corporation
Inventory
Musical composition held by the composer

Expert Solution

Section 1231 assets is a type of assets, defined by section 1231 of the U.S. Internal Revenue Code. Section 1231 asset is real or depreciable business property held for more than one year.

Examples of section 1231 assets include buildings, machinery, land, timber, and other natural resources, unharvested crops, cattle, livestock, and leaseholds that are at least one year old. However, section 1231 property does not include poultry and certain other animals, patents, inventions, and inventory–such as goods held for sale to customers.

Machinery used in the business : Section 1231 assets
Personal home : not a Section 1231 assets but a section 1245 property
Factory building : Section 1231 assets
Land held as an investment : not a Section 1231 assets
Land used in a business : Section 1231 assets
Shares of stock in Jones Corporation : not a Section 1231 assets because the stock is a capital asset under Section 1221.
Inventory : not a Section 1231 assets because goods held for sale to customers.
Musical composition held by the composer : not a Section 1231 assets

ekkarill92 answered 1 year ago

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