Jerry, a general contractor by trade, is a tenant of Montgomery Apartments. In exchange for four months rent ($500/month), Jerry provided the following items and services for Paul, the owner of the apartments:

	Paint and miscellaneous supplies for the apartments	$ 700
	Labor for painting and miscellaneous repairs	1,000
	Labor and supplies for paving the apartment parking area	1,900

How should Paul treat this transaction on his 2018 Schedule E?

Rental income of $3,600 and rental expenses of $3,600.

No rental income or rental expenses are to be reflected on the Schedule E because the net effect is 0.

Rental income of $3,600 and depreciation computed on the capital expenditures of $3,600.

Rental income of $3,600, rental expenses of $1,700, and depreciation computed on the capital expenditures of $1,900.

Answer rating: 100% (QA)

Rental income 9004 3600Rental expenses 7001000 1700L... View the full answer