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Katie owns and operates a kennel and veterinary hospital as a sole proprietor. She purchased...

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Accounting

Katie owns and operates a kennel and veterinary hospital as a sole proprietor. She purchased new equipment several years ago at a cost of $7,000 to use in her business. She used the MACRS 5-year percentages to recover the cost of the equipment.Shesold the equipment for $1,000 after claiming $4,312 of cost recovery deductions. Calculate the amount and nature (character) of the gain or loss resulting from this disposition.
a.$1,688 of 1231 loss so it will be treat as an ordinary loss
b.$2,688 ordinary loss
c.$1,688 of 1231 loss so it will be treated as a capital loss
d.$1,000 ordinary income
e.$2,688 capital gain

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