Tien Purchases an Office Building for $400,000,paying a $75,000 Cash $\$ 56,500 \text { building; } \quad \$ 7,500 \text { land }$

Multiple Choice

Tien purchases an office building for $400,000,paying a $75,000 cash down payment and borrowing $325,000 from Atlantic Meridian Mortgage Co.The purchase price is properly allocated 90% to the building and 10% to the land.Two years after the purchase,Tien 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) $\$ 56,500 \text { building; } \quad \$ 7,500 \text { land }$
B) $\$ 89,000$ building; $\quad$$\quad$$\quad$$\quad$ $\$ 10,000$ land
C) $\$ 346,500 \text { building; } \quad \$ 42,500 \text { land }$
D) $\$ 349,000$ building; $\quad$$\quad$$\quad$$\quad$$\$ 40,000$ land
E) $\$ 353,000 \text { building; } \quad \$ 40,000 \text { land }$