What does a 'Capital Asset' typically include?

A capital asset is generally defined as any asset that is owned for investment or personal use rather than for business or resale purposes. This broad definition includes various types of property such as real estate, personal possessions, and financial instruments like stocks and bonds.

The reason why this answer is correct is that it encompasses both the assets intended for investment, like stocks and bonds, and those held for personal use, such as a family home or personal vehicles. This inclusivity is essential in tax consideration contexts, as capital gains or losses on the sale of these assets need to be reported properly according to IRS regulations.

In contrast, the other options are too restrictive or focused on a specific category of assets. For example, focusing solely on real estate or commercial property excludes a wide range of capital assets such as personal items or financial investments. Similarly, limiting the definition to financial instruments like stocks disregards other significant categories of capital assets that also fall under this designation. Lastly, defining capital assets strictly as items purchased for resale misrepresents the broad nature of capital assets, which include items that are not necessarily acquired with the intention of making a profit through resale.