Docie Corporation purchased Residential Real Estate at a cost of $350,000. Accelerated Depreciation in the amount of $196,000 had been correctly claimed on the property when the property was sold for $640,000. Straight-Line Depreciation would have been $160,000. On the sale, Docie Corporation would recognize gain as follows:

1. $486,000 Section 1250 Gain (Ordinary Income)
2. $36,000 Section 1250 Gain (Ordinary Income) and $450,000 Section 1231 Gain (Long-Term Capital Gain)
3. $68,000 Section 1250 Gain (Ordinary Income) and $418,000 Section 1231 Gain (Long-Term Capital Gain).
4. $486,000 Section 1231 Gain (Long-Term Capital Gain).