Septa Is the Owner of Vacant Land That He Purchased

Essay

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?