Tien Purchases an Office Building for $400,000, Paying a $75,000

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 building; $7,500 land
B) $89,000 building; $10,000 land
C) $346,500 building; $42,500 land
D) $349,000 building; $40,000 land
E) $353,000 building; $40,000 land