2007 AMC 10A Problem 7

Last year Mr. Jon Q. Public received an inheritance. He paid 20\% in federal taxes on the inheritance, and paid 10\% of what he had left in state taxes. He paid a total of \$10500 for both taxes. How many dollars was his inheritance?

(\mathrm {A})\ 30000 \qquad (\mathrm {B})\ 32500 \qquad(\mathrm {C})\ 35000 \qquad(\mathrm {D})\ 37500 \qquad(\mathrm {E})\ 40000

Full credit goes to MAA for authoring these problems. These problems were taken on the AOPS website.