XYZ INC MAKES AN S CORPORATION ELECTION ON ANUARY 1, 2012. XYZ OPERATED AS A C CORPORAION FOR A NUMBER OF YEARS. THEY HAD THE FOLLOWING ASSETS

ACCOUNTS RECEIVABLE BASIS 0 ,FAIR MARKET VALUE 60000

EQUIPMENT BASIS 50,000 FMVALUE 60,000

LAND BASIS 30,000 FAIR MARKET VALUE 40,000

IN 2012 THE COMPANY COLLECTS 60,000 OF RECEIVABLES AND ITS TAXABLE INCOME, COMPUTED AS IF IT WERE A C CORPORATION IS 20,000.

WHAT IS BUILT IN GAINS TAX PAID BY THE CORPORATION

0

3900

7000

21000