Mrs. Ima Landlord owns and operates rental properties. The information relating to these properties for the year ended December 31, 2019 is as follows:

Building A (Class 1); Building B (Class 3); Building C (Class 3); Building B Fixtures (Class 8)

Capital Cost

$140,000; $5,00,000; $50,000 ; $10,000;

U.C.C @ Dec. 31, 2018

$120,000; $400,000; $40,000; $3,000

Rental revenues

$17,000; $40,000; $5,000;

Disbursements:

Property taxes

$3,500; $15,000; $1,800;

Repairs

$5,000; $6,000; $1,700;

Insurance

$1,000; $12,000; $500;

Superintendent salaries

$4,800; $8,000; $0;

Mortgage interest

$700; $0; $0;

Mortgage principal

$8,000; $0; $0;

Legal fees on sale of Building B

;$4,000;

Additional information:

During 2019, an addition was made to Building A at a cost of $50,000.  

During 2019, Building B and the fixtures referred to above were sold for total proceeds of $506,250. The property was originally purchased in 1987 at a cost of $560,000, which was allocated as follows:

Land $ 50,000

Building 500,000

Fixtures 10,000

$560,000

The property was appraised, just prior to the sale, and the following values were assigned:  

Land $100,000

Building 400,000

Fixtures -0-

$500,000

CCA classes and rates:

Class 1 – 4%

Class 3 – 5%

Class 8 – 20%

Required:

(1) Prepare, in good format, an aggregate Statement of Rental Income for the year-ended December 31, 2019 and a Capital Cost Allowance schedule to be filed by Mrs. Landlord with her 2019 personal income tax return.

Note:

GOOD FORMAT means that I want to see a proper statement heading and an itemized list of expenses. Provide detail by expense category, not by building.

(2) Calculate the taxable capital gain and/or allowable capital loss to be included in income by Mrs. Landlord, as a result of the sale of Building B.

Answer rating: 100% (QA)

SOLUTION1 IF WE HAVE RI TO REPORT IT WE HAVE TO FILE USING THE STATEMENT STATEMENT OF RENTAL INCOME ... View the full answer