LAWS3101 Study Guide - Midterm Guide: Ordinary Income, Ronnie Biggs, Independent Contractor
Document Summary
Characteristics: it is ordinary income if it is : regular or periodic receipt (e. g. wage, interest if it"s paid regularly, salary) fct v dixon, flow. Eisner v macomber | tree and fruit analogy: tree is capital and fruit is income. The rent of an investment property was considered income, and appreciation of the value of the house was regarded as capital. If the trust property was shares, then dividends owing from the shares were income, but pro t from selling the shares was usually capital. For an investment property, the rent is the fruit and therefore considered to be considered orindary income. But the sale of the property itself is the tree and therefore considered to be capital. The taxpayer"s ability to work and/or the employment contract would be the tree, which means the payment for services is the fruit and therefore ordinary income: some gains are ordinary income despite having no earning source.
