Apple, Inc. a cash basis S corporation in Orange, Texas, formerly was a C corporation. Apple has the following assets and liabilities on January 1, 2010, 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 2010, Apple 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 Apple's built-in gains tax?
$0
$206,500
$590,000
$695,000