Butte sold a machine to a machine dealer for $50,000. Butte bought the machine for $55,000 several years ago and has claimed $12,500 of depreciation expense on the machine. What is the amount and character of Butte's gain or loss?
A. $7,500 §1231 loss.
B. $5,000 §1231 loss.
C. $7,500 ordinary gain.
D. $7,500 capital gain.
E. None of these.
Answer: C. $7,500 ordinary gain.