Sandy acquired business machinery (which qualified as 7-year MACRS property) on July 15, 2010, for $10,000. In 2010, Sandy claimed a $1,429 regular MACRS depreciation deduction and she elected not to claim Sec. 179 depreciation or bonus depreciation. Because of net operating losses in 2011-2013, Sandy did not claim any depreciation deduction on her tax returns in those years. She sells the machine on July 1, 2013, for $6,000.
a. What is the adjusted basis of the machine on the sale date?
b. How much gain or loss is recognized on the sale of the machine?