Sammy sells a piece of specialized equipment (with a high resale value) used in his business for $41,650 on September 10, 2016. The equipment was purchased on May 20, 2013 for $32,000. Sammy has taken $9,200 of depreciation on the equipment. What are the amount and classification of the gain on the sale by Sammy?

$9,200 Section 1231 gain and $9,650 Section 1245 ordinary income.

$9,200 ordinary income under Section 1250 and $9,650 Section 1231 gain.

$18,850 Section 1231 gain.

$9,200 ordinary income under Section 1245 and $9,650 Section 1231 gain.