In July 1995, Dan Farley leased a building to Robert Shelter for a period of fifteen years at a monthly rental of

$1,000 with no option to renew. At that time the building had a remaining estimated useful life of twenty years.

Prior to taking possession of the building, Shelter made improvements at a cost of $18,000. These improvements had an estimated useful life of twenty years at the commencement of the lease period. The lease expired on June 30, 2010, at which point the improvements had a fair market value of $2,000. The amount that Farley, the landlord, should include in his gross income for 2010 is

a. $ 6,000

b. $ 8,000

c. $10,000

d. $18,500