In: Economics
A. R found a box while jogging near her home. In the box was $100,000. R reported the find to the police, but because the owner could be found, R was allowed to keep the money.
B. W purchased 10 acres of land for $100,000. Shortly after the purchase it was discovered that oil was present beneath the ground. The value of the land immediately increased to $5,000,000.
C. E borrowed $50,000 from a bank using his home as collateral for the loan. The home was worth $900,000.
Observations on whether the amount of income, if any, is taxable in the year 2020:
A. R found a box while jogging near her home. In the box was $100,000. R reported the find to the police, but because the owner could be found, R was allowed to keep the money.
The entire $100,000 is taxable at the prevailing tax rates. The found money will be clubbed to the overall income of R for the year 2020.
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B. W purchased 10 acres of land for $100,000. Shortly after the purchase it was discovered that oil was present beneath the ground. The value of the land immediately increased to $5,000,000.
The increase in value of the land is not taxable, unless W actually sells the land.
Any other income made by W, such as sale of oil, or rent from the land, will be taxable.
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C. E borrowed $50,000 from a bank using his home as collateral for the loan. The home was worth $900,000.
A loan taken doesn't constitute income. Hence, this amount is not taxable for E.