ABC Corporation acquires a new piece of equipment for $$50,000$ and uses it in ABC $\text{'}$s manufacturing operations. A few months after ABC places the machine in service, it discovers that the equipment is

not suitable for ABC $\text{'}$s business. ABC had fully expensed the equipment in the year of acquisition using Sec. $179.$ ABC sells the equipment for $$40,000$ in the tax year after it was acquired but held the

equipment only for a total of $9$ months. What was the tax status of the equipment when it was disposed of and the amount of the gain or loss?

a$.$ A capital asset and $$40,000$ gain.

b$.$ A Sec. $1231$ asset and $$40,000$ gain.

c$.$ None of the choices presented are correct.

d$.$ A Sec. $1231$ asset and $$40,000$ loss.

e$.$ An ordinary asset and $$40,000$ gain.