Fannie Corporation purchased Residential Real Estate at a cost of $650,000. Straight-Line Depreciation in the amount of $278,000 had been correctly claimed on the property when the property was sold for $820,000. On the sale, Fannie Corporation would recognize gain as follows: $40,000 Section 1250 Gain (Ordinary Income) and $408,000 Section 1231 Gain (Long-Term Capital Gain). $448,000 Section 1250 Gain (Ordinary Income). $55,600 Section 1250 Gain (Ordinary Income) and $392,400 Section 1231 Gain (Long-Term Capital Gain). $448,000 Section 1231 Gain (Long-Term Capital Gain).