Sarah sold a business-use machine for $50,500. Sarah bought the machine for $54,500 several years ago and has claimed $12,250 of depreciation expense on the machine. What is the amount and character of Sarah's gain or loss?

Multiple Choice

• $8,250 capital gain.
• $8,250 ordinary gain.
• None of the choices are correct.
• $4,000 1231 loss.
• $8,250 1231 loss.