Angie owns numerous strip malls. A major tenant of one of the strip malls wanted to cancel its lease because it was moving to another city. After lengthy negotiations, the tenant paid Angie $60,000 to cancel its obligations under the lease. If the tenant had fulfilled the lease terms, Angie would have received rent of $700,000.

a. What factors should Angie consider to determine the amount and character of her income from these circumstances? Angie must determine whether she is in the business of being a lessor and what her tax basis is for the lease.

b. What are the amount and character of her income from the cancelled lease? Ordinary income of $