Acacia Corp. was formed many years ago. Upon formation, it e…
Acacia Corp. was formed many years ago. Upon formation, it elected to use the cash method of accounting and adopted a calendar year-end. This year, it made an S election that became effective on January 1 and reported the following results: • Acacia’s taxable income is $570,000. • Acacia had assets with an $810,000 fair value and a $230,000 adjusted basis on January 1. • Acacia collected all $300,000 of accounts receivables outstanding on January 1 of this year. The receivables had a zero adjusted basis. • Acacia sold equipment for $6,000. The equipment had a $4,500 fair value and a $3,000 adjusted basis on January 1. Acacia claimed $1,000 of MACRS depreciation on the equipment this year prior to the sale. • Acacia sold land (a Sec. 1231 asset) for a $40,000 gain. The land had a $70,000 fair value and a $50,000 adjusted basis on January 1. • Acacia paid $160,000 of accounts payable outstanding on January 1. All the payables are deductible expenses. What is Acacia’s built-in gains tax liability? Be sure to show your work.