Umair sold some equipment he used in his business on August 29, 2018, that was originally purchased for $65,000 on November 21, 2017. The equipment was depreciated using the 7-year MACRS method for a total of $17,249. Assume there is no additional netting of gains and losses for this taxpayer.

a. Assume Umair sold the equipment for $45,000:

(1) What is the amount of realized gain or loss on the sale of the equipment?

(2) Is the nature of the gain or loss considered ordinary or long-term?

b. Assume Umair sold the equipment for $49,000:

(1) What is the amount of realized gain or loss on the sale of the equipment?

(2) Is the nature of the gain or loss considered ordinary or long-term?