Septa is the owner of vacant land that he purchased in 2005 for $400,000 and held for investment.On January 22,2009,he was paid $45,000 for a eighteen-month option on the land by Samantha.Samantha could buy the land for an additional $1,200,000 by exercising the option.Samantha had hoped to develop the land into a shopping center,but was unable to get the zoning changed to accommodate building a shopping center on the land.Consequently,Samantha did not exercise her option and the option expired on August 15,2010.What is Septa's basis,gain,and type of gain from these events?

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The Answer of Septa is the owner of vacant land that he purchased in 2005 for $400,000 and held for investment.On January 22,2009,he was paid $45,000 for a eighteen-month option on the land by Samantha.Samantha could buy the land for an additional $1,200,000 by exercising the option.Samantha had hoped to develop the land into a shopping center,but was unable to get the zoning changed to accommodate building a shopping center on the land.Consequently,Samantha did not exercise her option and the option expired on August 15,2010.What is Septa's basis,gain,and type of gain from these events?

Septa Is the Owner of Vacant Land That He Purchased