3. Mac invented a process for cleaning old aluminum siding. He obtained a patent for this process. His basis in the patent is $50,000. Because he did not have the capital to reduce his invention to practice, he sold the patent to a wealthy individual for $600,000 six months after acquiring the patent.

1. What is the amount and character (i.e. long-term, short-term) of the gain?

2. Subsequently, the purchaser decided not to reduce the patent to practice and sold the patent within two months to a Chinese company for $1,000,000. What is the amount and character of the gain to the purchaser?