Brandon, an individual, began business four years ago and has never sold a $1231$ asset. 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 or Loss

Machinery $ $30,000$ $ $7,000$ $ $10,000$

Computers $10,0006,000(2,000)$

Building $90,00020,000(2,000)$

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

Multiple Choice

$$7,000$ ordinary income, $$1,0001231$ loss, and $$1,920$ tax liability

$$6,000$ ordinary income and $$1,920$ tax liability

$$7,0001231$ gain and $$2,240$ tax liability

$$7,0001231$ gain and $$1,050$ tax liability

None of the choices are correct.