McCann, Inc. is in the business of garbage collection and disposal. The company began in 1980 as a partnership with assets of only two garbage trucks. In 1998, the company incorporated and reported annual revenues of $29,000,000 and serves much of northern Illinois. The company has encountered repeated difficulty in access to public landfills, to the point of limiting the ability to accept new business. Robert Johnson, Chief of Operations, has proposed that the company consider purchasing landfills. His projections indicate that, over the long-term, owning land for disposal purposes is not expected to be more expensive than the fees typically paid for access to others’ land. McCann, Inc. is contemplating the purchase of several acres of landfills in the Chicago area. The acquisition cost is $3,000,000. The salvage value of the land after its use as a landfill is estimated to be $500,000. On April 16, 2021, Robert Johnson called you, the tax manager of CPP CPAs, LLP, to determine the tax treatment of this land. You and he both are well aware that the cost of land is not depreciable. He makes the case that this land can be distinguished from the “usual” land because rather than buying land, McCann is actually buying the space above the land to use for business purposes.  You ask Mr. Johnson to give you time to investigate and promise him a reply within the week. 

Required: Perform the necessary tax research and write a memorandum to the tax file and advise Johnson in a client letter as to your research findings and in what year he should include the $600,000 in income.