Heather Purchased Undeveloped Land to Drill for Oil and Gas

Multiple Choice

Heather purchased undeveloped land to drill for oil and gas.She spent $800,000 on intangible drilling costs during the year of purchase,which she elected to immediately deduct.During the three years of the well's operation,Heather deducted $1.2 million of cost depletion.Heather has sold the property for a $3 million gain.The gain will be treated as

A) $3 million Sec.1231 gain.
B) $3 million ordinary gain.
C) $2 million ordinary income and $1 million Sec.1231 gain.
D) $1.2 million ordinary income and $1.8 million Sec.1231 gain.