Peyton & Eli, Inc. have the following transactions during 2017.

(1) Sale of factory acquired in 1998.

FMV at sale = $520,000

Original cost = $405,000

Straight-line depreciation through sale date = $325,000

(2) Sale of truck used in business, acquired in 2010.

FMV at sale = $5,500

Original cost = $24,000

Straight-line depreciation taken through sale date = $17,990

(3) Securities transactions

a. Caterpillar (acquired in 2015)

FMV at sale = $38,700

Adjusted basis = $32,000

b. ABC Company (acquired in 2013)

FMV at sale = $12,500

Adjusted basis = $20,000

Peyton & Eli, Inc. have unrecaptured Section 1231 losses of $15,000 during the preceding 5-year period.

1. Calculate the gain/loss for each transaction.

2. Determine the character of the gain/loss for each transaction (ordinary income, capital gain, Section 1231 gain, etc.)

3. Complete the netting procedure.