In 1980, Meg Ryan, a doctor who lived and worked in Sydney, purchased a 25...
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Accounting
In 1980, Meg Ryan, a doctor who lived and worked in Sydney, purchased a 25 -acre parcel of rural land on the outskirts of the city for $200,000. Over the years Meg used the property as a hobby farm for growing fruit trees and as a weekend retreat for relaxation. In recent years the surrounding area has become more developed and the property has increased in value.
Unfortunately, Meg has recently run into financial difficulties because of a malpractice legal suit and she is considering selling the property as a result.
Required:
Advise Meg as to whether she would be required to include any amount in her assessable income as a result of the sale.
Would your answer be different if she had originally purchased the property with the intention of selling it at a profit when land prices had risen sufficiently?
Would your answer be different again, if she decided to develop the property 3 years ago and had subdivided the land into 25 one-acre allotments and proceeded to construct roads and buildings on the land and sold the allotments separately over a period of one year?
Cite relevantcase law and legislation to support your answer.
(15 marks)
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