Brad sold a rental house that he owned for $249,500. Brad bought the rental house five years ago for $225,500 and has claimed $49,750 of depreciation expense. What is the amount and character of Brad's gain or loss?

Multiple Choice

$24,000 ordinary and $49,750 unrecaptured 1250 gain.

$24,000 1231 gain and $49,750 unrecaptured 1250 gain.

$73,750 ordinary gain.

$73,750 capital gain.

None of the choices are correct.

Alpha sold machinery, which it used in its business, to Beta, a related entity, for $39,500. Beta used the machinery in its business. Alpha bought the machinery a few years ago for $50,500 and has claimed $29,500 of depreciation expense. What is the amount and character of Alpha's gain?

Multiple Choice

$18,500 ordinary income under 1239.

$10,000 ordinary gain and $8,500 1231 gain.

$8,500 ordinary gain.

$18,500 capital gain.

None of the choices are correct.