Which of the following individuals is involved in a trade or business?
I.Lil owns a farm near Lafayette, Indiana. She leases the property to Cal, who operates the 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.
II.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

Which of the following individuals is involved in a trade or business?
I.Lil owns a farm near Lafayette, Indiana. She leases the property to Cal, who operates the 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.
II.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.
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A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Quizplus · Accepted Answer

Neither Lil nor Lorraine is involved in a trade or business based on the provided scenarios. Lil is merely earning income from leasing her property without involvement in the farming operations, and Lorraine uses her warehouse for personal storage, not a business activity.

Which of the Following Individuals Is Involved in a Trade