A piece of land was purchased by Yacov Corporation Ltd. for the purpose of constructing a high-rise
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The corporation had been newly formed when the above land was purchased. At about the same time, another piece of land was purchased and was developed into a commercial/industrial plaza which the corporation continues to own as a rental property. The principal shareholder of the corporation, Jake Yacov, owns and operates an electrical contracting business.
The Articles of Incorporation of the corporation contain the following statement of objects:
... to purchase, lease, acquire, hold, manage, develop, operate, pledge and mortgage, either absolutely as owner or by way of collateral security or otherwise, alone or jointly with others and either as principal or agent, property, real or personal, and assets generally of any and every kind of description.
No mention is made of the purchase and sale of land as a business activity.
REQUIRED
Write a memo for the Yacov Corporation Ltd.'s file evaluating the issue of whether the sale of the land should be treated as a receipt of income or capital gain for tax purposes. Arrive at a conclusion consistent with your analysis of the facts, but indicate the basis for any areas of potential opposition to your conclusion.
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Related Book For
Introduction To Federal Income Taxation In Canada
ISBN: 9781554965021
33rd Edition
Authors: Robert E. Beam, Stanley N. Laiken, James J. Barnett
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