Brandon, an individual, began business four years ago and has sold a 1231 asset with $5350 of losses within the last five years. Brandon owned each of the assets for several years. In the current year, Brandon sold the following business assets:

Asset Original Cost Accumulated Depreciation Gain/Loss

Machinery $30,700 $7,700 $ 10,350

Land 47,000 0 23,500

Building 104,000 27,000 (12,000)

Assuming Brandon's marginal ordinary income tax rate is 32 percent, what effect do the gains and losses have on Brandon's tax liability?

a)$21,850 1231 gain and $3278 liability

b)$21,850 ordinary income and $$6,992 tax liability

c)$8,800 1231 gain, $13,050 ordinary income, and $5,496 tax liability

d)$13,050 1231 gain, $8,800 ordinary income, and $4,774 tax liability