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Coastal Trucks Ltd. has a long-distance moving business In 2015, Coastal Trucks Ltd. acquired a 40-acre tract of vacant land in an industrial park near Vancouver. The land cost Coastal Trucks Ltd. $12 million. Francis Dale, the owner of Coastal Trucks Ltd, intended to relocate all of Coastal Trucks Ltd.'s business operations to this Site in 4 to 6 years. She was planning to add furiture storage and self-storage facilities. Francis Dale knew that she acquired the vacant 1 land a good Price. She believed that, if plans changed Coastal Trucks Ltd. would make at significant gain gain by reselling the land. She even notified the industrial park's property manager that Coastal Trucks Ltd. might be interested in selling part of the land, if the price was right. In 2020, Francis Dale became sick, so she was not able to work anymore. Shortly thereafter, Coastal Trucks Ltd. received an unsolicited offer of $5 million to buy 10 acres of the 40-acre site. Francis Dale accepted the offer and sold the 10 acres. Coastal Trucks Ltd. took back a $3 million first mortgage on the property, in order to close the deal. The mortgage will be repaid in four annual instalments, each worth $750,000, beginning in 2021. Coastal Trucks Ltd. still intends to move its current operations to the 30-acre remaining site. However, due to Francis Dale's illness, future plans to use the remainder of the site for new storage facilities are unlikely to move forward. Coastal Trucks Ltd.is considering whether it should sell off more acres, since it does not appear that the land is needed in its business operations. There are five purchasers willing to buy two to three acres each. Required: Coastal Trucks Ltd. sought your tax advice as to what was the appropriate treatment of the 10 acres sold. Provide the required advice.

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