Bozeman sold equipment that it uses in its business for $80,000. Bozeman bought the equipment two years ago for $75,000 and has claimed $20,000 of depreciation expense. What is the amount and character of Bozeman's gain or loss?
A. $25,000 §1231 gain.
B. $20,000 ordinary gain, and $5,000 §1231 gain.
C. $5,000 ordinary gain, and $20,000 §1231 gain.
D. $25,000 capital gain.
E. None of these.
Answer: B. $20,000 ordinary gain, and $5,000 §1231 gain.