Henry Adams has come to you for some help in computing his income from his investments. He

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Question:

Henry Adams has come to you for some help in computing his income from his investments. He is trying to plan for the payment of his 2022 taxes and wants an idea as to how much that tax bill will be. He has provided you with the following details regarding his investments for 2022.

Non-eligible Dividend from CCPC $3,000

Rental Properties

At the beginning of 2022, Henry had two rental properties. These properties are expected to have the following operating cash flows associated with them:

	#1	#2
Gross rents received	$24,000	$15,000
Expenses related to earning rental income:
Staging cost to attract tenants**	$2,500	$1,500
Real estate commission to agent**	$4,000	$2,500
Advertising (for tenants)	$500	$300
Property taxes	$3,400	$2,900
Utilities (landlord provided)	$5,600	$3,700

The real estate agent received a commission for renting each property. The agent paid for the staging fees but the landlord covered the Advertising cost.

Property #1 was purchased in 2012 at a cost of $700,000 for both the land and building. The cost of the land was $195,000 of the total purchase price. Property #2 was purchased in 2014 at a total cost of $605,000; the fair market value of the land at the time was $205,000. The UCC balance in Class 1 for property 1 was $342,735 and property 2 was $294,567 at January 1, 2022.

During 2022, the local community enacted strict new bylaws on the safety requirements of rental properties. To upgrade the two properties to the new code would require $90,000 for property #1 and $85,000 for property #2. As a result, Henry decided to improve #1 and paid $90,000 in July 2022. However, he decided to sell property #2 and did so for $848,000, effective May 5, 2022. The fair market value of the land was appraised to be $380,000 and the building $468,000. The purchaser of the property paid $300,000 on May 5, 2022, plus a mortgage that repays $10,000 monthly plus interest. The $10,000 monthly payments started on June 5, 2022. The interest paid to Henry from the buyer from June 5, 2022 to December 5^th inclusive was $8,250.

Henry used the proceeds, net of the $90,000 needed for property #1, to purchase a new simplex (a residental building) on Pape Avenue. The cost of the new property was $1,200,000, of which $450,000 related to the cost of the land. This property closed on August 1, 2022. Interest on the $442,000 mortgage is $7,367 for the last five months of the year. He was able to rent the building's units to students beginning in September with cash flows as follows:

Gross rents received	$16,000
Expenses related to earning rental income:
Advertising (for tenants)	600
Property taxes	3,700
Utilities (paid by tenants)	Nil

Required:

Calculate the effect on income for tax purposes for 2022 of the above investments. Henry Adams always likes to report the minimum possible income each year. Support your treatment of each item listed above with a reason or a complete calculation.