Hughes, an individual, sold an office building that it used in its business for $500,000. Hughes bought the building ten years ago for $650,000 and has claimed $200,000 of depreciation expense. What is the amount and character of Hughes's gain or loss? Assume a 15% tax rate on capital gains.

A. $10,000 ordinary and $40,000 1231 gain (15%).

B. $40,000 ordinary and $10,000 1231 gain (15%).

C. $50,000 Unrecaptured 1231 gain (25%).

D. $30,000 ordinary, $10,000 1231 gain (25%) and $10,000 1231 gain (15%).