Herbert, a collector of rare coins, bought a 1916 Spanish Bowlero for $2,000 in 1984. He sold the coin for $4,500 in January. Herbert retired from his loading dock job in June and began actively buying and selling rare coins. By December, Herbert’s realized gain from such activities was $21,500. What type of taxable income was January’s $2,500 gain?

Partial list of research material: §1221; Rev. Rul. 68-634, 1968-2 C.B. 46; Frankel, 56 TCM 1156 (1989).