Ryan Holeman, the president of Nine Iron Ltd, has come to your office seeking a second opinion. Nine Iron Ltd. carries on a mini golf and retail business in southem Manitoba. The CRA has reassessed Nine Iron Ltd. for the following transactions that occurred during last year: (a) Eighteen months earlier, the company purchased two acres of land just outside of Winnipeg with the intention of possibly developing a second retail outlet. Ryan did not have firm plans when he purchased the land. At the time, he thought he could either develop the property into a mini golf and retail outlet or build a gas station with an ovemight park for recrea- tion vehicles. Unfortunately, a significant lender backed down and the company was forced to sell the land. Luckily, as Ryan had speculated, the land was sold for a profit of $90,000. The new owner plans to develop an overnight park for recreation vehicles. (b) Nine Iron Ltd. immediately purchased a smaller plot of land within walking distance. The company is planning to build a second mini golf and retail outlet location next year. During the year, the company expensed interest and property taxes of $26,.000 relating to the vacant land. The company also expensed $7,000 in architect's fees, and legal and surveying costs for the development of the amusement park. The CRA reassessed Nine Iron Ltd. for $26.000 plus $3,500 in interest charges. claiming that Nine Iron Ltd. purchased the first plot of land with the intention of trading for profit. The CRA is also disallowing the expenses incurred on the second plot. Required Discuss the various income tax issues that Nine Iron Ltd. must address with respect to the above transactions.