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.

Understand the relationship between employers and employees concerning FICA and other employment-related taxes.

Comprehend the classification and effect of different types of taxes on companies and individuals.

Distinguish between different types of post-retirement benefits and their treatment in financial statements.

Assess the criteria for recognizing and disclosing contingencies and their impact on financial statements.

---

Definitions:

Instrument Panel

The dashboard section of a vehicle or machinery that houses the gauges, controls, and information displays for the operator.

Circular Display

A round-shaped screen or interface used in devices and instruments to visually present information or data.

Candle Power

A unit of measurement for luminous intensity, representing the light produced by a standard candle.

Legislation

Laws and regulations enacted by governing bodies to direct behavior, activities, or the layout of systems within a given jurisdiction.