Legal Definitions - capital transaction

A capital transaction is when someone buys, sells, or trades a capital asset. A capital asset is something that a person or business owns that is used to make money, like a building or a piece of equipment.

• Buying a new office building
• Selling a piece of machinery
• Trading a truck for a forklift

These examples show how a capital transaction involves the exchange of a capital asset. When a business buys a new office building, they are exchanging money for a new asset that they can use to make money in the future. When they sell a piece of machinery, they are exchanging that asset for money. And when they trade a truck for a forklift, they are exchanging one asset for another that they believe will be more useful to them.