Juanita Is a Sole Proprietor Who Has Some Outstanding Receivables

Multiple Choice

Juanita is a sole proprietor who has some outstanding receivables she wishes to sell.The receivables have a $16,000 FMV and a basis of $10,000.Juanita sells the receivables for $12,500.What gain or loss does Juanita recognize on the sale?

A) $3,500 capital loss.
B) $2,500 ordinary gain.
C) $2,500 capital gain.
D) $3,500 ordinary loss.