1. Jubal owns an older office building in a part of town that has seen better days. He has been trying to sell it for two years, but has had no offers and very few lookers. He recently lowered the asking price from $1.4 million to $1.1 million, which has attracted the attention of a prospective buyer, Eve. Last week, Eve suggested that she might be interested in leasing the building with an option to buy at the end of two years. Jubal is mulling over Eve’s informal offer, which is to pay monthly rent payments of $37,500 per month for 24 months, with an option to buy the property at the end of that period for $300,000. Jubal last rented the building two years ago for $15,000 per month, but the building has been vacant since then. Jubal comes to you for advice. Describe the likely federal income tax consequences of Eve’s offer for both Jubal and for Eve.