A Corporation Owns Many Acres of Timber,which It Acquired Three

question 6

Multiple Choice

A corporation owns many acres of timber,which it acquired three years ago,and which has a $120,000 basis.The timber was cut last year for use in the corporation's business.The FMV of the timber on the first day of last year was $270,000.The corporation made the appropriate election to treat the cutting as a sale or exchange.The timber is sold for $300,000 this year.The tax result this year is

• A)recognition of capital gain of $30,000.
• B)recognition of Sec.1231 gain of $30,000.
• C)recognition of ordinary income of $30,000.
• D)no income recognized since all recognition occurs in the year of the cutting of the timber.

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Definitions:

Effector

A part of the body, such as a muscle or organ, that produces a response when stimulated by a nerve impulse.

Interneuron

Neuron located within the central nervous system that conveys messages between parts of the central nervous system.

Stroke

Condition resulting when an arteriole in the brain bursts or becomes blocked by an embolism; cerebrovascular accident.