What is the key feature of the capital asset definition regarding purchased copyrights?

The definition of capital assets in the context of purchased copyrights recognizes purchased copyrights as capital assets. This designation is significant because it carries implications for how gains or losses from their sale are taxed.

Under the Internal Revenue Code, a capital asset is generally defined as property held by the taxpayer, excluding certain types of property like inventory or property used in a trade or business. Purchased copyrights fall under intellectual property, which is typically considered a capital asset when it is acquired. Thus, when a taxpayer purchases a copyright, the asset can generate capital gains or losses upon its sale, which are treated differently for tax purposes than ordinary income.

This treatment aligns with the broader principles of capital asset classification, emphasizing that both purchased and self-created copyrights ultimately result in similar tax implications when disposed of, leading to the conclusion that the key feature regarding purchased copyrights is their status as capital assets.