$1.$ Isabelle invests in land, and Grace invests in taxable bonds. The land appreciates by $$8,000$ each year, and the bonds earn interest of $$8,000$ each year. After holding the land and bonds for five years, Isabelle and Grace sell them. There is a $$40,000$ realized gain on the sale of the land and no realized gain or loss on the sale of the bonds. Are the tax consequences to Isabelle and Grace the same for each of the five years? Explain.

$2.$ A warehouse owned by Martha and used in her business $($i$.$e$.,$ to store inventory$)$ is being condemned by the city to provide a right$-$of$-$way for a highway. The warehouse has appreciated by $$180,000$ based on Martha$$s estimate of its fair market value. In the negotiations, the city is offering $$35,000$ less than what Martha believes the property is worth.

Alan, a real estate broker, has offered to purchase Martha$$s property for $$20,000$ more than the city$$s offer. Martha plans to invest the proceeds she will receive in an office building she will lease to various tenants.

Identify the relevant tax issues for Martha.

Would the answer in part $(1)$ change if Martha$$s warehouse was property being held for investment rather than being used in her business? Explain.