Trek sold machinery, which it used in its business, to BMC, a related entity, for $40,000. BMC used the machinery in its business. Trek bought the machinery a few years ago for $50,000 and has claimed $30,000 of depreciation expense. What is the amount and character of Trek's gain?
a. $10,000 ordinary gain and $10,000 §1231 gain.
b. $20,000 ordinary gain.
c. $20,000 ordinary income under §1239.
d. $20,000 capital gain.
e. None of the choices are correct.