Edward bought a new tugboat to operate on the American River for $1,998,999 including all taxes and fees. After several years of late nights and bad weather, Edward has decided to retire from the tugboat business. He has hired a commissioned boat broker to sell his tugboat in exchange for a 5% fee. After 5 months of work, the boat broker has successfully sold the American Queen to a wealthy sheik in the UAE for a gross sales price of $2,175,005 (before commission). The sale was finalized on November 15, 2017.

Required: Determine how much gain Edward must recognize on his tax return for 2017 based upon the three different placed in service dates: January 2010, June 2009, and October 2010. To be considered for full credit, you must show your work AND explain what type of gain Edward must recognize (capital or ordinary) including under what section you made your conclusions about the type of gain.

a. January 2010

b. June 2009

c. October 2010