Folly Corporation, which was formed in 2008, had $40,000 of net Sec. 1231 gain for its 2012 calendar year. Its net Sec. 1231 gains and losses for its 3 preceding tax years were as follows:
A. A net long-term capital gain of $40,000.
B. A net long-term capital gain of $5,000, and ordinary income of $35,000.
C. A net long-term capital gain of $10,000, and ordinary income of $30,000.
D. A net long-term capital gain of $30,000, and ordinary income of $10,000.
