Question - Rodeo, Inc., a cash basis S corporation in College Station, Texas, formerly was a C corporation. Rodeo has the following assets and liabilities on January 1, 2011, the date the S election is made.
Adjusted Basis 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 2011, 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?