Winchester LLC Sold the Following Business Assets During the Current

Winchester LLC sold the following business assets during the current year: (1) automobile,$30,000 cost basis,$12,000 depreciation,proceeds $20,000; (2) machinery,$25,000 cost basis,$20,000 depreciation,proceeds $10,000; (3) furniture,$15,000 cost basis,$10,000 depreciation,proceeds $4,000; (4) computer equipment,$25,000 cost basis,$6,000 depreciation,proceeds $10,000; (5) Winchester had unrecaptured §1231 losses of $3,000 in the prior 5 years.What is the amount and character of Winchester's gains and losses before the 1231 netting process?

A) $3,000 ordinary loss,$0 §1231 loss.
B) $7,000 ordinary gain,$10,000 §1231 loss.
C) $7,000 ordinary loss,$4,000 §1231 gain.
D) $1,000 ordinary gain,$4,000 §1231 loss.
E) None of thesE.All of the assets are §1231 assets: automobile $2,000 gain,machinery $5,000 gain,furniture $1,000 loss,and equipment $9,000 loss.This results in $7,000 ordinary gain and $10,000 1231 loss.The 1231 lookback rule only applies when there is a net 1231 gain.