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Nature of asset: Revenue or capital?, Nel - Coggle Diagram
Nature of asset: Revenue or capital?
Visser
Income = product of persons wit & energy
Income is what capital produces
What may be a capital asset to on TP - trading asset to another
Law books: To lawyer = capital asset, to bookstore = trading stock
Shares in consideration for services rendered
Amount accrued to TP as result of wits, energy & influence
Not of capital nature but REVENUE in nature
Assisted company and remunerated with shares for services rendered
George Forest Timber
All assets either Fixed or Floating Capital
Floating: consumed in process of production
Fixed: the structure that enables income to be generated
Gives rise to capital proceeds
Was income from sale of natural forest capital or revenue in nature?
No part of the proceeds were capital of nature therefore revenue that is included in GI.
Timber merchants - fell trees to saw up & sell as trading stock
Stott
Large coastal land - subdivided and kept his home
Dual intention?
Right to realize asset to best advantage
Consider dominant intention
Asset sold at profit doesnt indicate change of intention, therefore capital in nature
Natal Estates Ltd
Held land as capital asset. Subdivided & sold
Developing & marketing on grand scale
Change of intention
Scheme of profit making
Cross the Rubicon
Indicates change of intention : proceeds therefore revenue in nature
Nel
Held Kruger Rands as inflation hedge & children's inheritance
Never sold any until needed to buy new car for wife
Sale of Kruger Rands Capital or Revenue of nature?
Sales purpose not to make profit - realize capital asset in order to purchase another
Normally seen as capital unless you trade & buy them
