In November 1983, Alan purchased a block of land for $380,000 with the intention of one day building a shopping complex and leasing out the shops to tenants. In May 1998 he changed his mind and decided to sell the land and so listed it with a real estate agent for $640,000. The property did not sell so in January 2004, on the advice of his agent, Alan decided to sub-divide the land which at that time had a market value of $980,000. He obtained council approval to re-zone and sub-divided the land into 200 residential blocks. Alan managed the sub-division operation himself which included organising all council permits, construction of roads and installation of utilities. He did, however, enlist the real estate to market and eventually sell the blocks. He had sold all of the blocks by 30 June 2021 and received a total of $3.1 million. Based on the principles of cases such as Whitfords Beach, what would be the first element cost used by Alan to calculate any gain on the sale of the blocks?

a. $380,000

b. $640,000

c. $600,000

d. $980,000

e. $3.1 million