Randy, Inc., a cash-based C corporation, elects S corporation status in 20X2. The corporation has the following as of the date of the election:

Basis Fair Market Value

Cash $300,000 $300,000

Accounts receivable 0 $800,000

Undeveloped land 1,000,000 2,000,000

Total assets 1,300,000 3,100,000

Accounts payable 0 $ 100,000

Randy, Inc., has cash-basis accounts payable of $100,000. In 20X2, Randy collects the accounts receivable and pays the accounts payable. In 20X2, Randy has a taxable built-in gain of which of the following?

A. $0

B. $700,000

C. $800,000

D. $1.8 million