Is jose carrying on a business

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Question - Jose was the son of a race car driver, Joseph. Unfortunately, Jose did not have the same passion for cars that his father did. Following his daughter Jenny's formal, Jose had the great idea for a business opportunity after being laid off from his job at the Tax Office.

He began leasing a limousine, and using it to transport people from one party venue to the next, getting regular work 6 days a week. As demand for his services grew, Jose decided to upgrade one his limousines to a larger one. With the approval of the lessor, the old limousine was sold for a price greater than what was needed to pay out the lessor. This was expected by Jose. In accordance with the lessor's normal practice, Jose was allowed to keep the excess. Jose used the excess to put a down payment on a new limousine.,

Is Jose carrying on a business, and if so, is the excess amount income?

a. No, it can't be income as Jose is not 'carrying on' a business.

b. Jose is carrying on a business but the deposit paid on the new limousine is capital

c. No, it can't be income as Jose has a hobby

d. Jose is 'carrying on' a business, and the excess is income.

e. Jose is 'carrying on' a business, but the excess is capital.

Reference no: EM132619555

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