1. Butte sold a machine to a machine dealer for $50,000. Butte bought the machine for $55,000 several years ago and has claimed $12,500 of depreciation expense on the machine. What is the amount and character of Butte's gain or loss?

   		$7,500, 1231 loss
   		$5,000, 1231 loss
   		None of the choices are correct.
   		$7,500, capital gain
   		$7,500, ordinary gain