Sage Corporation is owned 40% by Paul and 60% by Art. Paul and Art are brothers....

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Sage Corporation is owned 40% by Paul and 60% by Art. Paul and Art are brothers. Sage purchased machinery three years ago for $50,000 and used it in the music recording business. Sage has deducted $10,000 of depreciation on the machine. This year, Sage sells the machinery to Art for $49,000. Art will use it in his other business and depreciate it over five years. With the knowledge that IRC 1239 applies to gains on sales of depreciable property to a related party if the property is subject to an allowance for depreciation by the transferee, how much and of what character is the gain recognized by Sage Corporation? O A. $1,000 of Section 1231 loss O B. $10,000 of ordinary income O C. $9,000 of ordinary income O D. $9,000 of Section 1231 gain Sage Corporation is owned 40% by Paul and 60% by Art. Paul and Art are brothers. Sage purchased machinery three years ago for $50,000 and used it in the music recording business. Sage has deducted $10,000 of depreciation on the machine. This year, Sage sells the machinery to Art for $49,000. Art will use it in his other business and depreciate it over five years. With the knowledge that IRC 1239 applies to gains on sales of depreciable property to a related party if the property is subject to an allowance for depreciation by the transferee, how much and of what character is the gain recognized by Sage Corporation? O A. $1,000 of Section 1231 loss O B. $10,000 of ordinary income O C. $9,000 of ordinary income O D. $9,000 of Section 1231 gain