X, Y, and Z each purchased an identical piece of land at a cost of $4,000.

• X constructed a restaurant on her land and operated it profitably for several years.

• Y did nothing with her land. It simply remained unused for several years.

• Z rented out his land for a number of uses—car parking, summer carnivals, and so on.

 Reasonable returns were achieved.

 Four years later, X, Y, and Z each sold their land for $12,000. X sold the land as part of the sale of the restaurant business. Y subdivided the land into three separate parcels and sold each for $4,000. Z had no intention of selling the land but received an offer that he felt he could not refuse.

Required:

Is the gain on sale of the land ($12,000 – $4,000 = $8,000) income from business for X, Y, and Z? Explain.