On March 31, 2020, Dan sold a gold pocket watch that he had inherited from his Uncle. The FMV at

the time of the inheritance was $5,000. The terms of the sale were a price of $12,000, with a 30% down

payment and the balance to be paid monthly over the next three years. The loan bears an interest rate of

5%. The first payment is scheduled to begin at the end of April, and will continue to be due on the last

day of all subsequent months. How much must Dan report as ordinary income, and how much must he

report as capital gain income for 2020?

A. Ordinary Income Capital Gain

$282 $3,143

B. Ordinary Income Capital Gain

$282 $3,257

C. Ordinary Income Capital Gain

$315 $3,143

D. Ordinary income? Capital Gain?

$315 $3,143