Frank, a single taxpayer, owned a warehouse that he rented as commercial property. He acquired the property several years ago for 196,000. He used the straight-line method of cost recovery, which totaled 35,000. Frank sold the property in February of the current year for 230,000. Frank is single, and has taxable income (not including the real estate gain) of 475,000. What is the amount and nature of the gain on the sale?
1) 7,000 ordinary income
2) 34,000 Section 1231 gain; 35,000 ordinary income
3) 69,000 ordinary income
4) 35,000 unrecaptured Section 1250 gain; 34,000 long-term capital gain