In 2019, TPC Inc. sold investment land with a $388,000 book and tax basis for $523,000. The purchaser paid $60,000 in cash and gave TPC a note for the $463,000 balance of the price. In 2020, TPC received a $67,800 payment on the note ($40,000 principal + $27,800 interest). In 2020, TPC's use of the installment sale method results in a:

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The installment sale method allows for the recognition of income when the payments are received. The gain on the sale is calculated as the selling price minus the book value, which is $523,000 - $388,000 = $135,000. The portion of the total gain recognized in 2020 is based on the ratio of the principal received ($40,000) to the total sale price ($523,000), not creating a permanent or temporary difference as described in the options. The options provided do not accurately describe the tax implications of the installment sale method based on the information given.