Rachelle purchased a rental duplex unit for $300,000 two years ago. She has claimed $20,000 of depreciation deductions during the holding period. She sells the rental property for $310,000 this year. She is in the 35% tax bracket and has $400,000 of taxable income. How will the total gain from the sale be taxed? 

$30,000 gain will be taxed at 15%  $20,000 will be taxed at 35%, 

$10,000 will be taxed at 15% $20,000 will be taxed at 25%, 

$10,000 will be taxed at 15%  $30,000 gain will be taxed at 35%