Michael sold machinery used in his business for $50,000. He purchased the equipment three years ago for $55,000 and deducted $22,800 MACRS depreciation through the date of sale. Compute and characterize Michael's gain on sale.
A. $17,800 ordinary gain
B. $17,800 capital gain
C. $17,800 Section 1231 gain
D. $22,800 ordinary gain and $45,000 Section 1231 loss
Answer: A
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