In January 2019, Peter purchased and placed into service a $20,000 piece of equipment for exclusive use in his business. He elected not to claim the special depreciation allowance that year. He sold the equipment in October 2021 for $7,000. During the two and a half years he owned the asset, he claimed depreciation totaling $9,505. Does Peter have a gain on loss, and where on Form 4797 should the sale be reported?

 Gain, reported in Part II.

 Gain, reported in Part III.

 Loss, reported in Part I.

 Loss, reported in Part II.