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:

Dehydration

A condition caused by the excessive loss of water from the body, exceeding the amount of water being taken in, leading to a deficiency in bodily fluids.

Sunken

Describes something that has fallen below the surrounding level or area, often used in reference to eyes or cheeks due to illness or malnutrition.

Acromegaly

A hormonal disorder that results when the pituitary gland produces excessive growth hormone, leading to enlarged bones and tissues.

Thick Skull

Informally describes having a denser than average cranial bone, often mentioned in medical contexts assessing head trauma risk.