Which is classified as a capital asset?

A capital asset is defined in the tax code as property that is held by an individual or by a business, with the primary exceptions being inventory and property held primarily for sale to customers. Among the options provided, personal items typically fall under the classification of capital assets, and this includes your car, assuming it is used for personal purposes rather than for business purposes.

The vehicle mentioned is regarded as a personal asset. In contrast, items like business supplies and inventory are not classified as capital assets. Business supplies are expensed rather than capitalized, and inventory is explicitly excluded from capital asset treatment since it is intended for sale in the regular course of business operations. Real property used in a trade or business is also excluded from capital asset classification because it is considered a business asset and is subject to different tax treatment under depreciation rules.

Therefore, the classification of your car that you use for personal errands as a capital asset aligns with the definitions laid out in the tax code, further emphasizing the distinction between personal property and business-related assets.