Winchester LLC sold the following business assets during the current year: (1) automobile, $30,000 cost basis, $12,000 depreciation, $20,000 proceeds; (2) machinery, $25,000 cost basis, $20,000 depreciation, $10,000 proceeds; (3) furniture, $15,000 cost basis, $10,000 depreciation, $4,000 proceeds; (4) computer equipment, $25,000 cost basis, $6,000 depreciation, $10,000 proceeds; (5) Winchester had unrecaptured 1231 losses of $3,000 in the prior five years. What are the amount and character of Winchester's gains and losses before the 1231 netting process? Assume all assets were held for more than one year. Multiple Choice $3,000 $3,000 ordinary loss, $0 1231 loss. $7,000 ordinary gain, $10,000 1231 loss. $7,000 ordinary loss, $4,000 1231 gain. $1,000 ordinary gain, $4,000 1231 loss