@FixedOn66 wrote "So, the basis of the land is negligible and thus we will have to recognize the majority, if not all, of the payment as ordinary income".
No. It's not ordinary income and/or depreciation recapture. It's the sale of non-depreciable land and should be reported as a long term capital gain. You could allocate the small land basis between the sold property and the remaining property. But for simplicity, you can call the basis 0 and let the small land basis stay with the remaining property. You also have the option of using all the land basis for this sale ("front loading").*
*Reference: https://scholarship.law.georgetown.edu/cgi/viewcontent.cgi?article=2602&context=facpub
