Ted purchased a 5,000 acre ranch in Montana. He tried... Ted purchased a 5,000 acre ranch in Montana. He tried unsuccessfully for 15 years to raise buffalo and to sell buffalo meat to a chain of health food stores. He offered the ranch for sale but was unable to find a suitable buyer because of the size of the property. He decided to market the property in 40 parcels, each approximately 100 acres, to hunters as private game reserves. He advertised in magazines read by hunters. During the current year, he was able to sell the 10 parcels at a net profit of $400,000

Is this sale ordinary income or capital gains?

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Analysis and Summary of decision?

Answer rating: 100% (QA)

The sale of the 10 parcels of the ranch as private game reserves would likely be treated as capital gains rather than ordinary income This determinati... View the full answer