Do not count property the buyer does not acquire or commit as though it belongs to the investment. Use the actual transaction and qualifying capital rules.
Separate valuation from spending
Reconcile the asset schedule, purchase payment and financing, then identify operating reserves, government charges and professional or household expenses separately. The investment must be substantial relative to the real business, not a larger fictional package. Ask about any disputed or contingent item before using it to support the capital calculation.
Substantiality is assessed proportionally: the amount invested is compared with the total cost of establishing a business of this kind, and the proportion must be high enough to show the investor’s financial commitment and the likely success of the enterprise. Substantiality is proportional to the total cost of purchasing or establishing this particular business, so a drainage installation company with trucks, trenchers and a crew is measured against its own acquisition cost rather than against any general figure.