Which one of the following transactions is most likely to be treated as business income for tax purposes? Which one will likely be treated as a capital gain? Income tax reference: ITA 9(1); IT-218R.
1. In Year 1, Bill purchased a parcel of land for $100,000 with the intention of building a rental property. In Year 5, Bill sold the rental property for $500,000.
2. In Year 1, Martha purchased a parcel of land for $100,000 with the intention of holding it until the land increased in value and could be sold at a gain. In Year 5, Martha sold the property for $500,000.