Each of the following Cases contains a brief description of an actual court case involving the identification of capital gains. For each Case, indicate whether you believe that the transaction should have generated a capital gain or business income. Explain the basis for your conclusion. Case A - An individual constructed an apartment building and operated it as a rental property for a period of three years. At that time, as the result of an unsolicited offer, the individual decided to sell the building. The decision was also influenced by the fact that there were unexpected difficulties in operating the building. The proceeds of the sale exceeded the cost of the building. (73 DTC 5060) Case B-An operator of a taxicab business decided to sell the business as it had proved to be unprofitable. He was not able to obtain a favourable price for the business as a whole and, as a consequence, he decided to sell the cars separately. During the subsequent two year period, he engaged in over 40 transactions involving the cars, largely because some worn out cabs had to be replaced and trade-ins were accepted from some buyers. A gain/profit was made on most transactions. (57 DTC 144) Case C-A individual carried on a full time interior design business as a sole proprietor. While carrying on the business the individual bought, lived in for short periods of time, and resold numerous residential properties. In most cases, improvements were made and the property modernized prior to resale. The sales prices were usually well in excess of costs. (64 DTC 56) Case D - An optical business purchased the assets of an optical company whose shares were owned by a group of medical doctors. The sale was accompanied by an agreement to pay each doctor a "kickback" for every prescription filled. A provincial statute eventually made these payments illegal, at which point the doctors sold their shares to the optical business. Even though each doctor sold one share, the payments to them varied from $1,800 to $57,000. The payments were to be made over a period of ten years and the agreement required the doctors to continue sending patients to the optical company. The amounts paid to the doctors were proportional to the size of their practices: (57 DTC 48) Case E- The manager of a company that operated vans designed for the transportation of horses engaged in several transactions involving the purchase and sale of racehorses. He attended race tracks on a regular basis and kept numerous horses for his own personal enjoyment. On most of the purchase and sale transactions, the proceeds of the sale exceeded the cost of the horse. (67 DTC 240)