The Gladys Corporation buys equipment (7-year MACRS property) costing $658,000 on May 12, 2017. In 2020, new and improved models of the equipment make it obsolete, and Gladys sells the old equipment for $34,000 on December 27, 2020. 

a. What is the character of Gladys Corporation’s gain or loss on the sale assuming that it takes the maximum cost-recovery deductions allowable on the equipment?

b. What is the character of Gladys Corporation’s gain or loss on the equipment assuming that it takes the minimum cost-recovery deduction allowable on the equipment?