Client owns several hundred acres of farm & timberland. Owns transfer truck to haul cattle and other products to market. Owns bulldozer.
Truck is used to haul for other people as well as himself. Bulldozer is used for other people as well as himself.
Lawyer has talked him into incorporating the bulldozer for liability reasons. So [poof!!] we have an corporation whose sole asset is a bulldozer and some cash.
Client makes some money by charging customers some $80 - $100 per hour. But his expenses far exceed his revenue because he does about 100 hours of bulldozing on his own place. If he were to charge his farming operation, this would result in another $9000 in revenue and the bulldozercorp would be showing a profit.
Should we claim an extra $9000 in revenue and charge $9000 to the farm operation?
(Jainen, please don't interject the possibility of section 1252 conservation to make a monumentally complicated question out of something otherwise simple and direct)
I say yes.
Truck is used to haul for other people as well as himself. Bulldozer is used for other people as well as himself.
Lawyer has talked him into incorporating the bulldozer for liability reasons. So [poof!!] we have an corporation whose sole asset is a bulldozer and some cash.
Client makes some money by charging customers some $80 - $100 per hour. But his expenses far exceed his revenue because he does about 100 hours of bulldozing on his own place. If he were to charge his farming operation, this would result in another $9000 in revenue and the bulldozercorp would be showing a profit.
Should we claim an extra $9000 in revenue and charge $9000 to the farm operation?
(Jainen, please don't interject the possibility of section 1252 conservation to make a monumentally complicated question out of something otherwise simple and direct)
I say yes.
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