Blair and Cannon Corporations Are the Two Members of an Affiliated

Blair and Cannon Corporations are the two members of an affiliated group. No prior net Sec. 1231 losses have been reported by any group member. The two corporations report consolidated ordinary income of $100,000 and gains and losses from property transactions as follows: $$\begin{array} { | c | c | c | c | } \hline \text { Corporation } & \text { STCG/STCL } & \text { LTCG/LTCL } & \begin{array} { c } \text { Sec.1231 } \\\text { Gains and Losses }\end{array} \\\hline \text { Blair } & ( \$ 5,000 ) & \$ 6,000 & \$ 3,000 \\\text { Cannon } & 6,000 & ( 7,000 ) & ( 3,000 ) \\\hline\end{array}$$ Included in the above totals is $6,000 of long- term capital losses recognized by Cannon on an intercompany transaction. Excluded from the above is a $4,000 Sec. 1231 gain originally deferred by Cannon that must be reported by the group in the current year. Which one of the following statements is incorrect?

A) The affiliated group reports a $4,000 net Sec. 1231 gain.
B) The consolidated group must report a net long- term capital gain of $9,000 and a net short- term capital gain of $1,000.
C) Cannon Corporation's separate return reports a $6,000 net long- term capital gain.
D) None of the above statements are incorrect.