Peter has been in practise as a doctor in Sydney since 1982. In 1984, he purchased a 25-hectares farm near Batlow, which is considered the premium apple growing region in Australia. The purchase price for the farm was $700,000. Peter borrowed the funds to purchase the farm. At the time of purchase the farm was used to grow apples and Peter continued to grow apples on the farm, employing a full-time manager for this purpose. As a result of the Black Summer bushfires in 2019/2020 however, most of the apple trees and packing sheds on Peters farm were destroyed. Peter decided not to replant apple trees. Instead, he decided to grow hazelnuts and cherries because he believed these would provide a higher yield than apples given current market prices. In late 2021, Peter arranged with his farm manager to oversee the removal of all remaining and burned-out apple trees on the farm and to prepare the soil to make it suitable for planting 200 cherry trees and 100 hazelnut trees. It was estimated that it would take around 12 months to complete removal of all existing apple trees and prepare the soil for planting of cherry and hazelnut trees. The total cost of tree removal and soil preparation work was $120,000. This included the hiring of equipment and personnel to help remove the apple trees, tilling the soil with fertiliser and compost in preparation for the new plantings. Peter also entered into a contract to purchase 200 cherry trees and 100 hazelnut trees and seedlings. However, before purchasing the new trees Peter was approached by Golf Dreams Pty Ltd (GDPL), a company that owns and operates golf courses with an offer to purchase 20 hectares of the farm for $5 million. Peter decided to accept GDPLs offer and subdivided the farm into two lots Lot A which was 20 hectares in size and Lot B being 5 hectares in size. He also arranged for construction of fencing and a road between the two lots and the connection of water, electricity and sewerage to both lots before selling Lot A to GDPL. Peter retained Lot B as a hobby farm and built a cottage for himself and his family to stay there on weekends. Required: Advise Peter whether: (1) the $120,000 for tree removal and soil preparation was incurred incommencing a new business; and (2) the $5 million sale price for Lot A constitutes ordinary income forpurposes of s 6-5 of the Income Tax Assessment Act 1997 (Cth).