Conversion of Capital Asset

Tax Glossary Definition

Conversion of Capital Asset

Conversion of Capital Asset – Conversion of a capital asset refers to the process of changing the nature of an asset from a capital asset to stock-in-trade for business purposes. This is relevant for capital gains taxation, as the treatment of gains differs once the asset becomes stock-in-trade.

Example: Conversion of a capital asset into stock-in-trade is similar to a real estate developer transforming a piece of land into saleable plots for business purposes.

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