Marquez purchased some equipment for $58,750 on August 15,2016.He decided he did not need the equipment so he sold it on June 13,2017 for $56,500.The equipment was subject to depreciation of $6,964 for 2016 and 2017.What gain or loss will Marquez recognize on the sale of the equipment?

A) $2,250 ordinary loss.
B) $2,250 capital loss.
C) $4,714 ordinary gain.
D) $4,714 capital gain.

Marquez will recognize a $4,714 ordinary gain. This is calculated by taking the sale price of $56,500 and subtracting both the purchase price of $58,750 and the depreciation of $6,964, then adding back the depreciation since it reduces the equipment's basis. The correct calculation is $56,500 - ($58,750 - $6,964) = $4,714. This gain is considered ordinary because it is related to a business asset.