Jennifer Judd gives her son, Jim, Section 1245 property. The property has an adjusted basis of $11,000 to Jennifer, who has taken $2,000 in depreciation expense. Jim uses the property for three years, takes depreciation of $3,000 and then sells it for $14,000. What amount of gain must Jennifer recognize and what amount of gain must Jim recognize?

		$2,000 Section 1231 gain; $3,000 Section 1231 gain
		$0; $5,000 ordinary income and $1,000 Section 1231 gain
		$2,000 ordinary income; $6,000 Section 1231 gain
		$0; $3,000 ordinary income and $3,000 Section 1231 gain