Capital Assets

Capital assets
- property held by tax payer
- NOT USED FOR BUSINESS

Non capital assets (used for business)
- inventory
- held for sale to customers
- depreciable personal property & real estate used in trade (section 1231, 1245, 1250)
- A/R and N/R from sales
- Treasury stock

Section 1231
- personal & real property
- buildings, machinery, land, timber and other natural resources, unharvested crops, cattle, livestock and leaseholds that are at least a year old.

Gains & losses are netted against each other in the same manner as capital gains and losses, except:

• net section 1231 gain is considered a capital gain;
• net section 1231 loss is classified as an ordinary loss

Section 1245
- personal property (i.e. machinery & equipment)

Section 1250
- real property (fixed property - i.e. land & everything permanently attached to it)

Section 179 deduction
2015 Deduction Limit = $25,000
This deduction is good on new and used equipment, as well as off-the-shelf software. This limit is only good for 2015, and the equipment must be financed/purchased and put into service by the end of the day, 12/31/2015.

2015 Spending Cap on equipment purchases = $200,000
This is the maximum amount that can be spent on equipment before the Section 179 Deduction available to your company begins to be reduced on a dollar for dollar basis.
This spending cap makes Section 179 a true "small business tax incentive".