During 2018, Paul sells residential rental property for $290,000, which he acquired in 1997 for $145,000. Paul has claimed straight­line depreciation on the building of $54,500. What is the amount and nature of Paul’s gain on the sale of the rental property? 

a. $189,500 Section 1231 gain 

b. $145,000 Section 1231 gain, $54,500 “unrecaptured depreciation” 

c. $54,500 Section 1231 gain, $189,500 ordinary income

d. $135,000 Section 1231 gain, $54,500 “unrecaptured depreciation” 

e. None of the above