Taxation on Resale of Property

George Sloan sold farmland valued at $200,000 to his son Frank.  Frank paid $40,000 at closing and signed an installment obligation for the remainder of the purchase price to be paid over ten years at 10% interest on the outstanding balance. If Frank sells the property to a second purchaser for $210,000 cash 20 months after his own purchase, which of the following statements is correct?

1. Frank need not show any capital gain in the year of sale.
2. In the year of Frank’s sale, George must realize gain based on the total sales price paid to Frank.
3. The $10,000 gain realized by Frank has no income tax implications for George.
4. George is unaffected by the later sale and will continue to report the same capital gain each year that he receives an installment payment.