Mr. Rod Reynolds purchased a triplex on March 12, 2017 for a total cost of $775,000. Of this amount, it is estimated that $225,000 should be allocated to the land on which the building was located. The three rental units in the triplex are identical in size and features and, for purposes of allocation to a CCA class, the property is considered to be a single unit.

On March 22, 2017, Mr. Rod Reynolds purchased furniture and appliances for one of the units at a total cost of $14,000.

Early in April, 2017, all three units were rented. For 2017, Mr. Rod Reynolds’s triplex generated rents of $33,000 and incurred expenses, other than CCA, of $14,000.

In February, 2018, the tenants in the furnished unit moved out and purchased all the furniture and appliances from Mr. Rod Reynolds for $8,500. For 2018, Mr. Rod Reynolds’s triplex generated rents of $35,000 and incurred expenses, other than CCA, of $18,000.

Mr. Rod Reynolds claimed the maximum CCA allowable in both years.

Required

Calculate the Net Rental Income 2017 and 2018. Also, determine the UCC balances on January 1, 2019. Include in your solution any tax consequences associated with the sale of the furniture and appliances.

Answer rating: 100% (QA)

Net Rental Income for Mr Rod Reynolds Date Income CCA Expense April 17 Rent Gener... View the full answer