Alpha sold machinery, which it used in its business, to Beta, a related entity, for $40,400. Beta used the machinery in its business. Alpha bought the equipment a few years ago for $49,600 and has claimed $30,400 of depreciation expense. What is the amount and character of Alpha's gain?

$21,200 ordinary income under 1239.

$10,000 ordinary gain and $11,200 1231 gain.

$11,200 ordinary gain.

$21,200 capital gain.

None of the choices are correct.