Stefani purchases gold 3/1/20. On 5/1/20 Stefani acquires a put to sell gold anytime on or before 12/31/20 The contracts are offsetting positions. If the price of gold goes up, the value of the put goes down, and vice versa. Neither contract is traded on an exchange but both contracts are actively traded.

1. On 4/30/21 Stefani sells the gold purchased on 3/1/20 for a gain of $5,000. What is the character of Stefanis gain from the sale of the gold?
2. What happens to Stefanis deferred loss from the sale of the put?

(please reference to code sections and/or regulations)