Which of the following individuals is involved in a trade or business? Lil owns a farm near Lafayette, Indiana. She leases the property to Cal, who operates the I. II. farm for himself. Lil receives 10% of Cal's net income as part of the lease agreement but has no responsibilities for the farming operation. Lorraine owns a warehouse located in Brooklyn NY. She paid $250,000 for the real estate several years ago. It is now appraised at over $1,000,000, but she still uses the building only to store her painting collection.
A) Only statement I is correct.
B) Only statement II is correct.
C) Both statements are correct.
D) Neither statement is correct.

Question

Quizplus · Accepted Answer

Neither Lil nor Lorraine is actively involved in a trade or business. Lil is merely a passive lessor, and Lorraine uses the warehouse for personal storage, not for business purposes.

Which of the Following Individuals Is Involved in a Trade