Several years ago, Nilo paid $70,000 to purchase equipment to use in its business. This year, it sold the equipment for $76,500. Accumulated MACRS depreciation through date of sale was $18,000. Determine the amount and character of Nilo's gain recognized.

Multiple Choice

$18,000 ordinary gain and $6,500 capital gain

$24,500 Section 1231 gain

$24,500 ordinary gain

$18,000 ordinary gain and $6,500 Section 1231 gain