Kyle purchased three acres of land with an old building on it for $2 million. Kyle bought the land with the intent to demolish the old building and construct a new one. Shortly after completing the purchase, Kyle pays $120,000 to have the old building demolished and another $1 million to construct the new office building. Kyle wants to know how the $120,000 demolition payment is treated for tax purposes?

a. Kyle can deduct the entire $120,000 as a current expense under IRC 162.

b. Kyle must add the $120,000 to the basis of the new office building under IRC 280B(a)(2).

c. Kyle must add the $120,000 to the land of the land under IRC 280B(a)(2).

d. Kyle can choose whichever of the above options is most beneficial to him under IRC 280B(a)(2).