Four years ago, Firm RD paid $$468,000$ for $12$ acres of undeveloped land. This year, the firm sold the land for $$1$ million. What is the

character of RD$\text{'}$s $$532,000$ recognized gain under each of the following assumptions?

Required:

a$.$ RD improved the land by adding roads and utilities and then subdivided the land into $36$ one$-$third$-$acre tracts that RD held for sale

to local builders.

b$.$ RD made no improvements to the land and sold the entire $12$ acres to a Japanese purchaser.

Capital gain

Ordinary gain

Section $1231$ gain