In the Current Year, Henry, a Sole Proprietor, Sold for $65,000

Multiple Choice

In the current year, Henry, a sole proprietor, sold for $65,000 a machine that was used in his business. The machine had been purchased a few years ago for $50,000, and when it was sold, it had accumulated depreciation of $20,000 and an adjusted basis of $30,000. For the current year, how should this gain be treated?

A) Ordinary income of $35,000
B) Section 1231 gain of $35,000
C) Section 1231 gain of $20,000 and ordinary income of $15,000
D) Section 1231 gain of $15,000 and ordinary income of $20,000
E) None of the above