Which of the following is a characteristic of a 'Section 1231 asset'?

Answer options:

Held for investment.

Depreciable property or real property used in a trade or business held for more than one year.

Inventory held for sale to customers.

How to approach this question

Define §1231: Business use + Long-term holding + Depreciable/Real.

Full Answer

B.Depreciable property or real property used in a trade or business held for more than one year.✓ Correct

Section 1231 assets are depreciable personal property or real property used in a trade or business and held for more than one year. Inventory and copyrights (held by creator) are ordinary assets. Investment property is a capital asset.

Common mistakes

Confusing §1231 assets with Capital Assets (investment) or Ordinary Assets (inventory).

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Practice the full CPA REG Practice Exam 2

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