In Year 3 Daniels, an individual, sold Section 1245 property for $21,000 that had an adjusted basis of $12,000, resulting in a $9,000 gain. The property had cost Daniels $20,000 when purchased in Year 1, and $8,000 of MACRS depreciation had been taken. How should Daniels report the gain on Daniels’ Year 3 tax return?
a. As a long-term capital gain of $9,000
b. As an ordinary gain of $1,800 and a long-term capital gain of $7,200
c. As an ordinary gain of $8,000 and a long-term capital gain of $1,000
d. As an ordinary gain of $7,200 and a long-term capital gain of $1,800