All tax calculations should be based on the 2020 Tax Rate Schedules. Figures should be rounded to the nearest dollar. Percentages should be rounded to the nearest whole percentage (e.g., 32% instead of 32.2%) In all cases, MACRS depreciation (double-declining balance) is taken rather than an expensing option (section 179 expensing or bonus depreciation).

Depreciation. Saengdao is a professional cellist and is self-employed. She bought a handmade cello in May of 2017 for $40,000. She used the cello in performances throughout the rest of 2017, all of 2018 and part of 2019. In November of 2019, she sold the cello for $37,000. Saengdao took depreciation deductions for the cello each year. Total depreciation at the time of the sale was $19,010. What is the amount and character of her income (or loss) from the sale?

A)$16,010 ordinary income

B)$19,010 ordinary income; $3,000 section 1231 loss

C)$16,010 section 1231 gain

D)$16,010 capital gain