Crosstown builders is considering remodeling an old building it currently owns. the building was purchased ten years ago for $1.2 million. over the past ten years, the firm rented out the building and used the rent to pay off the mortgage. the building is now owned free and clear and has a current market value of $1.9 million. the company is considering remodeling the building into industrial-type apartments at an estimated cost of $1.6 million. the estimated present value of the future income from these apartments is $4.1 million. which one of the following defines the opportunity cost of the remodeling project?
1. cost of the remodeling
2. current market value of the building plus the remodeling costs
3. current market value of the building
4. present value of the future income
5. initial cost of the building plus the remodeling costs

James jones is the owner of a small retail business operated as a sole proprietorship. during 2017, his business recorded the following items of income and expense: revenue from inventory sales $ 147,000 cost of goods sold 33,500 business license tax 2,400 rent on retail space 42,000 supplies 15,000 wages paid to employees 22,000 payroll taxes 1,700 utilities 3,600 compute taxable income attributable to the sole proprietorship by completing schedule c to be included in james’s 2017 form 1040. compute self-employment tax payable on the earnings of james’s sole proprietorship by completing a 2017 schedule se, form 1040. assume your answers to parts a and b are the same for 2018. further assume that james's business is not a service business, and that it has $155,000 unadjusted basis in tangible depreciable property. calculate james's 2018 section 199a deduction.