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7 Cards in this Set
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Work done to asset to facilitate sales (STRONG) |
Enhancing value or asset's marketability (breaking down of assets into smaller lots to facilitate sale) may be a pointer to trading motive Cape Brandy Syndicate v IRC Wine syndicate joined in a separate syndicate to purchase brandy. Brandy was blended with French Brandy and sold at a profit. |
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Circumstances of Sale |
Circumstances responsible for sale. If selling because of sudden emergency or necessity to realise an asset is therefore likely to dispel existence of trade IRC v Old Bushmills Distillery Whisky from taxpayer that went to liquidation was not in sellable state. Liquidator processed the whisky for sale. HELD: Was an act required to recover funds and sales constituted realisation of companies' assets.
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Frequency of transaction (STRONG) |
Series of transactions and systematic and methodical activity may constitute adventure in nature of trade
Pickford v QuirkeTaxpayer acquired cotton mills and conducted asset stripping a number of times with a number of mills. Taxpayer acquired cotton mills and conducted asset stripping a number of times with a number of mills."If an act of selling is repeated and becomes systematic then he becomes a trader" "If an act of selling is repeated and becomes systematic then he becomes a trader" |
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Quick turnover |
Interval between purchase and re-sale and reason for that interval Disposal of asset held for many years is arguably realisation of investment than if sale follows very soon after purchase. Wisdom v Chamberlain Purchased silver bullion to counter effects of devaluation of land. Purchase was financed by loan and short term basis in order to realise profits. Assessed to be trading profit |
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Sales organisation |
Organised activity to promote sale confirm sign of trade (advertisement, sales campaign) Martin v Lowry Bought large quantities of linen and setup large skilled organisation to sell linen |
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Source of finance |
Where short term loan is used to finance transaction, this often indicates an intention to re-sell in short term. Lynch v Edmondson Taxpayer built flats and argued premium received was capital receipt. Held: flat was financed through short term bank borrowings to finance flat construction (loan must be repaid after one of the flat was sold) |
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Subject matter |
Property like commodities are normally subject of trading Rutledge v CIR CASE Taxpayer bought 1 million toilet olls and resold to one individual for profit Deemed adventure in nature of trade as it is not for personal enjoyment or investment purposes |
