Basically everything you own is a capital asset, this is quite true whether you are using it for business or luxury. The people of the internet revenue service are very much interested in your capital assets. This is because the IRS likes to get everything they can and only leave a little space for you to deal with the value of your loss.
A very important thing to do also is to make sure you pay your taxes on your gains in value of the capital assets when you are going through the procedure of selling them. The short fall of this is that you will only get to claim a loss for things like stocks. This is not quite fair but that the way it is you will have to take it or leave it. The proper way of reporting you losses and gains is by subtract the purchase price from the price which it was sold for, This is then reported to the IRS on a report known as schedule D, and this should be attached to your 1040 tax return.
These capital gains and losses are classified under two different categories such as long term and short term. The main issue now is how long you have owned this capital asset you wish to sell. If the time period is less than a year it is considered as a short term gain or loss. And if the time you were holding the asset for passes a year you then have a long term investment.
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