COMMERCE 4SB3 Chapter Notes - Chapter 4: Sole Proprietorship, Tax Credit, Term Life Insurance
6 Dec 2017
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Chapter 4 - income from business general concepts an rules. Business income receipts are fully taxed while capital gain receipts are only partially taxed (50%) Sale of the fruit from a tree is business income. Sale of the tree generates capital income, capital transaction. For businesses that deal with buying and selling trees, the trees are their business transaction e. g. real estate. Prior to 1972 there was no inclusion of capital gain to your taxes, so you paid no taxes on capital gains and pay about 80% on business income. Secondary intention: if primary intent was frustrated, did taxpayer have at time of purchase, a motivating intention to sell the property at a profit. Relation of the transaction to the taxpayer"s business. Activity or organization normally associated with trade (could be adventure in the nature of trade) e. g. the people that bought toilet paper and sold it. Determined by the particular use of asset by taxpayer.
