In Year 1, Ray sold land with a basis of $40,000 for $100,000. He received a $20,000 down payment and the buyers note for $80,000. In Year 2, he received the first of four annual payments of $20,000 each, plus 12% interest. What is the gain to be reported in year 1?

None

$8,000

$12,000

$20,000