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:

Highly Correlated

Refers to two or more variables that have a strong linear relationship with each other, indicated by a correlation coefficient close to either 1 or -1.

Linear Regression Model

An approach in statistics that aims to represent the connection between a dependent variable and one or more independent variables through the application of a linear equation to the data observed.

Random Error Term

A variable in statistical models that represents unexplained or random fluctuations in the observed data, not accounted for by the explanatory variables.

Values

Principles, standards, or qualities considered inherently important or desirable in a certain context.