1. Duncan owns 5,000 acres of undeveloped real property which he purchased for investment for $1 million 10 years ago. On 9/1/20 Johnny Miller Golf Courses purchases an option to purchase the property for $3 million anytime in the next 12 months. Miller pays Duncan $20,000 for this right. On 8/31/21 Johnny Miller exercises the option. How do Duncan and Johnny Miller treat (for tax purposes) the issuance of the option and the exercise of the option?