In 2021, D. McNabb, sold a piece of equipment from his business for $200,000. The equipment was purchased in 2018 for $150,000, had a useful life of five years, and was depreciated. A total of $105,000 depreciation was taken.

Requirements (show computations and provide explanations):

1. Determine the realized gain/loss and the recognized gain/loss on the sale.
2. Determine how the recognized gain/loss sale is treated for tax purposes. Discuss the type of recognized gain/loss and related character.
3. Determine the realized gain/loss if McNabb sold the property for $35,000.
4. Using the facts from (3) determine how recognized gain/loss for tax purposes. Discuss the type of recognized gain/loss and related character.