Pepperoni Corporation sold a parcel of land valued at $300,000. Its basis in the land was $240,000. For the land, Pepperoni received an installment note where they buyer agrees to pay $100,000 in cash in the current year, $100,000 in year 2, and a $100,000 in year 3. What is Pepperonis recognized gain each year?

$20,000 each year.

All $60,000 of gain is recognized in the first year due to depreciation recapture.

$20,000 in year 1, and $40,000 in year 2.

We need to know if the land was used in the business or held for investment.

$80,000 each year.