Sam's factory experienced a small explosion. Two of his best machines were destroyed in the resultant fire. The first machine had an adjusted basis of $5,000 after depreciation of $6,000 and a fair market value of $3,000 just before the explosion. Sam received insurance reimbursement of $3,000. The second machine had an adjusted basis of $7,000 after depreciation of $11,000 and a fair market value of $10,000. Sam received $8,000 reimbursement for the loss of this machine. Both machines were held for over one year. How are these transactions reported on Sam's income tax return