FC is a foreign corporation that was engaged in a US trade or business as a widget manufacturer in Years 1-5. It sold all its widget output in the US. FC terminated its manufacturing activities in the US at the end of Year 5. Consequently, FC sold its widget making machine in Year 5 for $2 million, realizing a gain of $500K characterized as a capital gain under 1231 (you should remember that code section from tax 3001). The buyer did not pay FC any portion of the $2 million in Year 5, but instead gave FC a note under which the full $2 million is payable in Year 10. (Assume the note bears adequate interest from for Years 6- 10.) FC elected installment sale treatment for recognizing the gain. What is the appropriate tax treatment of the $500K gain? The entire gain is FDAP income under section 871(a) and subject to 30% withholding under section 1441(a). The entire gain is FIRPTA income under section 897(a) and the $2 million proceeds are subject to 15% withholding under section 1445. The entire gain is ECI income under the lookback rule section 864(c)(6) such that the gain is taxed under section 871(b). O None of the gain is ECI income under the lookback rule section 864(c)(6) because even if full payment of the $2 million were made in Year 5, none of the gain would have been considered as ECI because none of the gain would have US sourced income under section 865(a).