Facts:

A couple years ago Whitney and Ed North purchased a very old desk for $600. After letting the desk sit in their garage for over a year, Whitney decided to take the desk apart and while doing so she found an old document that was stuck in a dark recess of the desk which then found out it was a Picasso painting. Both Whitney and Ed contacted an auction house to get it appraised. In December 2020, the painting was authenticated and appraised at $1,350,000 by the auction house. In April 2021 it was auctioned and fetched $1,650,000 net of fees and commissions. Whitney and Ed received the money in May of 2021.

Issue: Do Whitney and Ed have taxable income? If so, when do they have taxable income and what amount? What is the character of any income?

Authorities:

Conclusion:

Analysis: