LO.2 The tax credit for rehabilitation expenditures is available to help offset the costs related to substantially rehabilitating certain buildings. The credit is cal- culated on the rehabilitation expenditures incurred and not on the acquisition cost of the building itself. You are a developer who buys, sells, and does construction work on real estate in the inner city of your metropolitan area. A potential customer approaches you about acquiring one of your buildings that easily could qualify for the 20% rehabilitation credit on historic structures. The stated sales price of the structure is $100,000 (based on appraisals ranging from $80,000 to $120,000), and the rehabilitation expenditures, if the job is done correctly, would be about $150,000. Your business has been slow recently due to the sluggish real estate market in your area, and the potential customer makes the following proposal: if you reduce the sales price of the building to $75,000, he will pay you $175,000 to perform the rehabilitation work. Although the buyer's total expenditures would be the same, he would benefit from this approach by obtaining a larger tax credit ($25,000 increased rehabilitation costs X 20% = $5,000). It has been a long time since you have sold any of your real estate. How will you respond?