Reference no: EM132533508

Question - Jessie purchases an office building for $400,000, paying a $75,000 cash down payment and borrowing $325,000 from the bank. The purchase price is properly allocated 90% to the building and 10% to the Two years after the purchase, Jessie remodeled one floor of the building at a cost of $25,000. Annual maintenance costs and property taxes total $4,000. A total depreciation of $36,000 is deducted over the 3 years. Determine the adjusted basis of the building and the land as of the end of year 3?

a. $349,000 building; $40,000 land

b. $89,000 building; $10,000 land

c. $353,000 building; $40,000 land

d. $346,500 building; $42,500 land

e. $56,500 building; $ 7,500 land