Five Years Ago, Q&J Inc

Multiple Choice

Five years ago, Q&J Inc. transferred land with a $345,000 book and tax basis for a different parcel of land worth $472,000. Q&J included its $127,000 realized gain in book income, but the exchange was nontaxable. This year, Q&J sold the parcel of land received in the exchange for $533,000 cash. Which of the following statements is true?

A) The nontaxable exchange had no effect on Q&J's deferred tax accounts.
B) The nontaxable exchange resulted in a deferred tax liability that reversed this year.
C) The nontaxable exchange resulted in a deferred tax asset that reversed this year.
D) The sale of the parcel of land had no effect on Q&J's deferred tax accounts.