Brandon, an individual, began business four years ago and has sold 1231 assets with $5,900 of losses within the last 5 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	$	31,800	$	8,800	$	10,900
Land		58,000		0		29,000
Building		126,000		38,000		(23,000	)

Assuming Brandon's marginal ordinary income tax rate is 35 percent, what effect do the gains and losses have on Brandon's tax liability?

Multiple Choice

$2,200 1231 gain, $14,700 ordinary income, and $5,475 tax liability.

$16,900 ordinary income, $5,915 tax liability.

$16,900 1231 gain and $2,535 tax liability.

$14,700 1231 gain, $2,200 ordinary income, and $2,975 tax liability.

None of the choices are correct.