5. Jerry bought a house for $650,000. He lived in it for two years and he decided to buy a new house to live in. Rather than sell the old house he rents out the house. At the time he rents out the house the house has depreciated in value to $500,000. While he rents out the house he is able to deduct $35,000 in depreciation. He sells the house for $200,000. How much gain or loss will he recognize for tax purposes? Assume instead, he sells the house for $700,000, how much gain/loss will he recognize for tax purposes? What is the character of the gain/loss for tax purposes?