In 2018, an automobile manufacturer organized as a corporation sold a machine used in its assembly line to another company for $520,000. The company had originally purchased the machine in 2015 for $500,000. At the date that the company sold the machine, the machine had accumulated depreciation equal to $150,000.

Total amount of gain recognized from the sale of the machine was $200,000 (so the original date of purchase for the asset was still 2015 and the accumulated depreciation is still $150,000). Also, assume that they had nonrecaptured net Sec. 1231 losses in 2011, 2014, and 2017 tax years of the following amounts.: ($5,000), ($1,000), and ($7,000).

The company has had no other net Sec. 1231 gains or losses in any other tax year since 2008 outside those mentioned above.

How much is treated as ordinary income and how much is treated as long-term capital gain? Explain.