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