Mr. Reynolds constructed a $500,000 income-producing building on a lot for which he paid $100,000. Mr. Reynolds financed the construction of the building by paying $100,000 cash and obtaining an 8% per annum interest rate loan for $400,000 secured by a first trust deed lien against the property. Under these conditions, Mr. Reynolds can depreciate on future income tax returns:
A: $600,000;
B: $500,000;
C: $400,000;
D: $100,000.
Answer: B: $500,000;
Business
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