MC Qu. 64 Brandon, an individual, began business four...

Brandon, an individual, began business four years ago and has never sold a 1231 asset. Brandon owned each of the assets for several years. In the current year, Brandon sold the following business assets:

Asset	Original Cost	Accumulated Depreciation	Gain/Loss
Machinery	$30,000	$7,000	$10,000
Computers	10,000	6,000	(2,000)
Building	90,000	20,000	(2,000)

Assuming Brandon's marginal ordinary income tax rate is 35 percent, what effect do the gains and losses have on Brandon's tax liability?

$7,000 ordinary income, $1,000 1231 loss and $2,100 tax liability.

$6,000 ordinary income and $2,100 tax liability.

$7,000 1231 gain and $2,450 tax liability.

$7,000 1231 gain and $1,050 tax liability.

None of these.