Final answer:
Capital assets are valuable items a taxpayer owns, excluding inventory, accounts receivable, and depreciable property used in business operations. These items are integral to the company's regular operations and are not viewed as capital assets. Accounts payable are liabilities, not assets, and are therefore not included.
Step-by-step explanation:
Definition of Capital Assets
Capital assets are an item of value that a taxpayer holds, with several specific exclusions. These exclusions typically include property or items that a taxpayer directly uses in the course of conducting business, which are not deemed capital assets. Examples of such exclusions are inventory, which refers to goods that a business has produced but not yet sold and is still keeping in storage; accounts receivable, which are the monies owed to a company by customers for goods or services delivered on credit; and depreciable property used in the business, such as machinery, buildings (not including land), vehicles, and equipment that lose value over time.
Therefore, for capital assets' definition, one must exclude items like inventory and accounts receivable, as they are part of the company's regular turnover of goods and services. Accounts payable, on the other hand, represent outstanding bills or obligations, which are not considered assets but rather liabilities. Intangible assets, such as intellectual property or software used in a business, might vary in their classification depending on specific tax codes or business valuation contexts.