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Question

Alomar, a cash basis S corporation in Orlando, Florida, holds the following assets and

liabilities on

January 1, 2019, 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 the year, Alomar collects the accounts receivable and pays the accounts payable. The

land is sold for $3 million, and the taxable income for the year is $590,000. Calculate any

built-in gains tax.

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