Tito was part of a successful band that eventually ran aground after the lead singer fancied a solo career. The lead singer used a microphone and keyboard that belonged to Tito, so after he left, with Tito not being able to play the keys or sing, he decided to sell the equipment.

As the band was quite popular, he was able to sell the keyboard and microphone for a sizeable profit. Realising that with the band now finished he might struggle for income, and that the bands equipment was popular, he decides to sell two more guitars, which once again yield a significant return.

A keen businessman, Tito sees an opportunity in this and decides to buy the rest of the bands gear for nominal prices and sell them at inflated prices under the name Titos Tuneful Treats on eBay. However the novelty wore off and Tito lost money on the pieces he bought.

What of Titos income is statutory income and what is ordinary income?

Group of answer choices

All receipts are ordinary income.

All receipts are statutory income.

The proceeds from the sale of the guitars are ordinary income while all other proceeds are statutory income.

The proceeds from the sale of the keyboard and microphone are ordinary income while all other proceeds are statutory income.