I:10-25 Allowed Versus Allowable Depreciation. Sandy acquired business machinery (which qualified as 7-year MACRS property) on July 15, 2019, for $10,000. In 2019, Sandy claimed a $1,429 regular MACRS depreciation deduction and she elected not to claim Sec. 179 depreciation or bonus depreciation. Because of her low tax rate in 2020–2022, Sandy did not claim any depreciation deduction on her tax returns in those years. She sells the machine on July 1, 2022, for $6,000.

a. What is the adjusted basis of the machine on the sale date?

b. How much gain or loss is recognized on the sale of the machine?