Keiko Sells a Piece of Equipment Used in Her Business

Multiple Choice

Keiko sells a piece of equipment used in her business for $14,853 on August 10,2017.The equipment was purchased on January 4,2016 at a cost of $12,849.Keiko has taken $3,855 of depreciation on the equipment.What is the amount and classification of the gain on the sale by Keiko?

A) $5,859 ordinary income under Section 1245.
B) $5,859 Section 1231 gain.
C) $3,855 ordinary income under Section 1245 and $2,004 Section 1231 gain.
D) $3,855 Section 1231 gain and $2,004 ordinary income under Section 1245.