On April 1, 2017, Carlson Corporation, a calendar year, cash method C corporation , sold equipment that it used for 3 years in its business corporations. Under the terms of the installment agreement, Carlson corporation received $100,000 in 2017, and it will receive $200,000 in 2018, and $300,000 in 2019. Carlson Corporation purchased the equipment on Feb 1 2014 for $1,000,000, its accumulated tax depreciation on the date of sale was $600,000, and its adjusted basis in the equipment was $400,000.

a) What is the amount and character of gain, if any, that Carlson Corporation must recognize in 2017, 2018, and 2019. Please show your work and explain your calculations.

b) How would your answer change in park a above if instead of selling equipment, Carlson Corp sold land it held for investment that had a cost and an adjusted basis of $400,000? Please show your work and explain your calculations.