XYZ is a partnership that is developing condominiums for sale. Total projected revenue is $10,000,000 and total projected costs are $8,000,000. Construction costs incurred to date is $1,500,000. All partners federal marginal income tax rate is 35%. If XYZ pre-sells all units by taking a 10% deposit prior to breaking ground, what will be the partners total federal income tax? Assume that all cash deposits are used to pay for construction costs and no cash is distributed to the partners.

A. Zero as no cash has been distributed to the partners. B. $350,000 C. $131,250 D. $70,000