What part of speech is "involving" in the sentence below, a gerund or a participle?

Question

Courts have had particular problems with situations involving the purchase of software.

What part of speech is "involving" a gerund or a participle?

Answer 1

I would say it's a participle as part of the larger adjectival phrase "involving the purchase of software", which modifies "situations". A gerund is usually only a verbal noun, like "I like eating cake".

Answer 2

It is the present participle in a reduced defining relative clause that is reduced to a present participle:

The complete sentence is:

• Courts have had particular problems with situations that/which involve the purchase of software.

To reduce a relative clause to a present participle:

1. Remove the relative pronoun
2. Change the verb to the present participle form
3. Place the present participle phrase after the modified noun

Examples:

• The man who lives near my home walks to work every day. -> Reduced: The man living near my home walks to work every day.
• The girl who attends my school lives at the end of the street. -> Reduced: The girl attending my school lives at the end of the street.