A case involving a potato merchant who purchased land with the intention to hold it as an investment. No income was generated by the land; however, it did have planning permission. After an unsolicited offer, the land was sold. a. This was a large piece of land; therefore, it was a trade. b. The transaction was far removed from the taxpayer’s normal activity and was similar to an investment hence not trading. c. This was trading activity; the farmer uses land to farm therefore this was a part of his normal activity and subject to tax on trade. d. The land was marketable; therefore, the sale is one of adventure in trade.
A case involving a potato merchant who purchased land with the intention to hold it as an investment. No income was generated by the land; however, it did have planning permission. After an unsolicited offer, the land was sold. a. This was a large piece of land; therefore, it was a trade. b. The transaction was far removed from the taxpayer’s normal activity and was similar to an investment hence not trading. c. This was trading activity; the farmer uses land to farm therefore this was a part of his normal activity and subject to tax on trade. d. The land was marketable; therefore, the sale is one of adventure in trade.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
A case involving a potato merchant who purchased land with the intention to hold it as an investment. No income was generated by the land; however, it did have planning permission. After an unsolicited offer, the land was sold.
a.
This was a large piece of land; therefore, it was a trade.
b.
The transaction was far removed from the taxpayer’s normal activity and was similar to an investment hence not trading.
c.
This was trading activity; the farmer uses land to farm therefore this was a part of his normal activity and subject to tax on trade.
d.
The land was marketable; therefore, the sale is one of adventure in trade.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education