Gainesville LLC sold the following business assets during the current year: (1) machinery, $20,000 cost basis, $4,000 depreciation, proceeds $22,000; (2) automobile, $15,000 cost basis, $12,000 depreciation, proceeds $7,000; (3) equipment, $15,000 cost basis, $10,000 depreciation, proceeds $4,000; (4) computer equipment, $35,000 cost basis, $16,000 depreciation, proceeds $15,000; (5) Winchester had unrecaptured 1231 losses of $5,000 in the prior 5 years.

a.) What is the amount and character of Winchester's gains and losses before the 1231 netting process from the prior years 1231 losses? In order to receive full credit, be certain to show all your work, and use specific words in discussing recapture, etc (code sections, etc ) .

b.) After completing the above answer, then compute Gainesvilles net tax liability, assuming they are taxed as a single member entity at 30%.