Pedro Sells Land That He Held as an Investment with a Basis

Pedro sells land that he held as an investment with a basis of $40,000 for $50,000.The terms of the sale require the buyer to pay Pedro $10,000 at the closing of the sale and $20,000 per year for the next 2 years with interest at 7% on the unpaid balance.What is the proper amount of gain to be reported from the sale during each year Pedro receives payments?
$\begin{array} { l }& \text { Current } & \text { First } & \text { Second } \\&\text { Year } & \text { Year } & \text { Year }\\a.&\$2,000&\$4,000&\$4,000\\b.&\$10,000&\$-0-&\$-0-\\c.&\$-0-&\$4,000&\$6,000\\d.&\$3,333&\$3,333&\$3,334\\e.&\$-0-&\$-0-&\$10,000\\\end{array}$