Section 1221

The part of the Internal Revenue Code that defines a Capital Asset. It actually states what is not a capital asset.
Examples: Under Section 1221 the following are not Capital Assets:

• inventory (such as lots of a subdivider)

• receivables collected in the course of business (such as Notes received from the sale of lots by a Subdivider)

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

• certain U.S. Securities

• real or depreciable property used in a trade or business (see Section 1231)

The following are capital assets:

• the personal Residence that one owns

• raw land held as an investment

• Mortgages held as investments