If Sec.1231 applies to the sale or exchange of an unharvested crop sold with land,the costs of producing the crop are
A)capitalized.
B)deducted as an expense of operations when incurred and also deducted from the sales price at the time of the sale.
C)deducted when incurred if the land is sold but capitalized if the land is exchanged.
D)deducted as an expense of operations when incurred.

Question

Quizplus · Accepted Answer

According to Sec. 1231, the sale or exchange of an unharvested crop sold with land is treated as a sale of a capital asset. Therefore, the costs of producing the crop are capitalized and can be deducted as a capital loss if the sale results in a loss, or can be used to reduce any gain from the sale.

If Sec1231 Applies to the Sale or Exchange of an Unharvested