What Is the Character of Land Used in an Active

question 24

Multiple Choice

What is the character of land used in an active trade or business for two years?

• A) Capital.
• B) Ordinary.
• C) §1231.
• D) Investment.
• E) None of these.

---

Definitions:

Owner's Equity

The residual interest in the assets of a business after deducting liabilities; represents the owner's claim on the business assets.

Liabilities

Financial obligations a company owes to outside parties.

Assets

Resources owned or controlled by a business, which are expected to produce future economic benefits.

Accounting Equation

The fundamental principle of accounting that states Assets = Liabilities + Equity, which must always be in balance for accurate financial reporting.