Norm Acquired Office Equipment for His Business at a Cost

Multiple Choice

Norm acquired office equipment for his business at a cost of $10,000. After two years of use, Norm exchanges the equipment for different equipment with a fair market value of $7,000. MACRS depreciation on the original equipment was $4,753. What is the amount and character of the gain recognized?

A) No gain or loss.
B) $1,753 Section 1231 gain.
C) $1,753 Section 1245 ordinary income.
D) $4,753 Section 1231 gain.
E) $4,753 section 1245 ordinary income, and $3,000 Section 1231 loss.