Jake purchased a $300,000 earthmover for his business.He sold the earthmover for $245,000 after taking $210,000 of depreciation.What is the nature and amount of the gain or loss on the sale?

A) $55,000 Section 1245 ordinary income and $100,000 Section 1231 gain.
B) $90,000 Section 1245 ordinary income and $65,000 Section 1231 gain.
C) $155,000 Section 1231 gain.
D) $155,000 Section 1245 ordinary income.

Section 1245

A section of the U.S. Internal Revenue Code that deals with the tax treatment of depreciable property and requires the recapture of depreciation upon sale of the property as ordinary income.

Section 1231

A tax provision related to the treatment of gains and losses on property used in a trade or business or held for the production of income.

Depreciation

A method of allocating the cost of a tangible asset over its useful life.