(a) The requirement is to determine the classification of
Ruth’s diamond necklace. The diamond necklace is classified as
a capital asset because the definition of “capital asset” includes
investment property and property held for personal use. Answers
(b), (c), and (d) are incorrect because Sec. 1231 generally
includes only assets used in a trade or business, while Sections
1245 and 1250 only include depreciable assets.