Here is the Johnson's. They own a rental home, a single-family dwelling. It generates net income after expenses of $12,000 annually. They purchased it for $150,000. They have taken $50,000 of depreciation on it. They would like to sell it because they are tired of worrying about renters. They think they can sell it for $220,000.

What would the tax consequences be of selling the rental house? Be sure to show your calculations.