Question

In 2014, Iris King bought a diamond necklace for her own use, at a cost of $10,000. In 2019, when the fair market value was $12,000, Iris gave this necklace to her daughter, Ruth. No gift tax was due. This diamond necklace is a _________

Answer 1

Capital asset

Step-by-step explanation:

Capital asset are classified as the property which are expected to generate some value over the duration of time.

Capital assets includes,

Buildings

Computer equipment

Jewelry

Machinery, and vehicles etc.

The capital assets has an expected useful life of more than one year

It can be sold as a normal part of business operations.