In January 2013, Iris Corporation purchased and placed into service a 1933 building that houses retail businesses. The cost was $300,000, of which $25,000 applied to the land. In modernizing the facility, Iris Corporation incurred $312,000 of renovation costs of the type that qualify for the rehabilitation credit. These improvements were placed into service in October 2014.
a. Compute Iris Corporation's rehabilitation tax credit for 2014.
b. Calculate the cost recovery deductions for the building and the renovation costs for 2014.