Jon owns 100% of Jon, Inc( JI) . JI is liquidated and Jon receives land with a FMV of$500,000 and a tax basis of$300,000 and a building with a fair market value of$1,000,000 and a tax basis of$200,000 . The building is subject to a mortgage of$100,000 .Jon's basis in JI stock is$200,000 . JI has$3,000,000 of earnings and profits . As a result of the liquidation, Jon must recognize income of

A.

$1,200,000 capital gain

B.

$1,300,000 capital gain

C.

$0 income

D.

$1,400,000 dividend income