Which of the Following Individuals Is Involved in a Trade

Multiple Choice

Which of the following individuals is involved in a trade or business?
I.Lil owns a farm near Lafayette, Indiana. She leases the property to Cal, who operates the farm for himself. Lil receives 10% of Cal's net income as part of the lease agreement but has no responsibilities for the farming operation.
II.Lorraine owns a warehouse located in Brooklyn NY. She paid $250,000 for the real estate several years ago. It is now appraised at over $1,000,000, but she still uses the building only to store her painting collection.
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A) Only statement I is correct.
B) Only statement II is correct.
C) Both statements are correct.
D) Neither statement is correct.