rodeo inc a cash basis s corporation in college station texas formerly was a c corpo 699256

Rodeo, Inc., a cash basis S corporation in College Station, Texas, formerly was a C corporation. Rodeo records the following assets and liabilities on January 1, 2012, the date its S election is made.

Adjusted Basis

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Fair Market
Value

Cash

$ 200,000

$ 200,000

Accounts receivable

–0–

105,000

Equipment

110,000

100,000

Land

1,800,000

2,500,000

Accounts payable

–0–

110,000

During 2012, Rodeo collects the accounts receivable and pays the accounts payable. The land is sold for $3 million, and taxable income for the year is $590,000. What is Rodeo’s built in gains tax?

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