Billy purchased business equipment for $100,000 in 2015 and has taken $20,000 of cost recovery (depreciation). Billy sells the equipment in 2021 for $110,000.

How is Billy's gain taxed?

$10,000 ordinary income

$10,000 LT capital gain

$20,000 LT capital gain

$10,000 ordinary income

$10,000 ordinary income

$20,000 LT capital gain

$20,000 ordinary income

$10,000 LT capital gain

______________

Billy purchased business equipment for $100,000 in 2015 and has taken $60,000 in cost recovery (depreciation). Billy sells the equipment in 2021 for $50,000.

What is the amount and character of Billy's gain or loss?

Sec. 1231 gain $5,000

Sec. 1245 gain $20,000

Sec. 1231 loss $10,000

Sec. 1245 gain $10,000

Sec. 1231 gain $10,000

Sec. 1245 gain $10,000