HomeworkLib
Question

An individual purchased a rental property for $120,000 in a prior year. Currently the property has...

An individual purchased a rental property for $120,000 in a prior year. Currently the property has an undepreciated capital cost (UCC) of $60,000. The gross rental revenue for the year was $12,000. Total expenses, excluding capital cost allowance (CCA), were $10,000. What would be the minimum net rental income (loss) the individual would include in their net income?

Multiple Choice

  • $(400)

  • $0

  • $2,000

  • $12,000

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1
Calculation of Net Rental Income
Gross Rental Income $                                                            12,000.00
total Expenses $                                                            10,000.00
Net Rental Income before Deducting CCA $                                                              2,000.00
Deduction CCA $                                                              2,000.00
Taxable Income $                                                                           -  
Calculation of CCA Deduction = undepreciated capital cost (UCC) X 4%
= 60000 X 4%
=2400
But my income before deduction is only $2000
so I can adjust only upto my Income level
0 0
Add a comment
Know the answer?
Add Answer to:
An individual purchased a rental property for $120,000 in a prior year. Currently the property has...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Sally Frampton has two Class 1 rental properties. Property 1 has a UCC at the beginning...

    Sally Frampton has two Class 1 rental properties. Property 1 has a UCC at the beginning of the year of $550,000 and has net rental income before the deduction of CCA of $43,000. Property 2 has a UCC of $985,000 at the beginning of the year, but has incurred a net rental loss before CCA of $26,000. What is the maximum amount of CCA that Sally can claim this year? Do you separate and why? How much CCA would be...

  • Question 2 Ms. Gold has been investing in real estate for almost half a century. On...

    Question 2 Ms. Gold has been investing in real estate for almost half a century. On January 1, 2018, she owned four rental properties and the relevant facts on these properties are as follows: 112 Bay Street This is a Class 3 building that has a capital cost of $850,000. Its UCC at the beginning of the year was $627,000. During the year, it generated rent of $81,000 and incurred property taxes of $10,500, interest charges of $13,000, and other...

  • Martha Shine has provided you with the following information for 20xx: She owns rental properties originally...

    Martha Shine has provided you with the following information for 20xx: She owns rental properties originally valued at $275,000. (Property 1: land $70,000, building $55,000) (Property 2: land $90,000, building $60,000) The buildings are Class 1 (4%) properties. -Net rental income before CCA in 20xx was $11,000. -The UCC on building 1 at the beginning of 20xx was $50,000. -The UCC on building 2 at the beginning of 20xx was $40,000. -Property 2 was sold in 20xx for $250,000 (land...

  • Martha Shine has provided you with the following information for 20xx: She owns rental properties originally...

    Martha Shine has provided you with the following information for 20xx: She owns rental properties originally valued at $275,000. (Property 1: land $70,000, building $55,000) (Property 2: land $90,000, building $60,000) The buildings are Class 1 (4%) properties. -Net rental income before CCA in 20xx was $11,000. -The UCC on building 1 at the beginning of 20xx was $50,000. -The UCC on building 2 at the beginning of 20xx was $40,000. - Property 2 was sold in 20xx for $250,000...

  • Ranjit owns a residential rental building which he purchased for $300,000 in 2017. In that year,...

    Ranjit owns a residential rental building which he purchased for $300,000 in 2017. In that year, his rental income before CCA was $6,000. In 2018, his rental income before CCA was $12,000. Ranjit always minimizes his tax liability. Which of the following statements is correct? a) Ranjit has net rental income of nil in 2018. b) Ranjit has a net rental loss of $2,000 in 2018. c) Ranjit has net rental income of $480 in 2018. d) Ranjit has net...

  • Rental property

    Use the following facts to answer problemsAlexa owns a condominium near Cocoa Beach in Florida. This year, she incurs the following expenses in connection with her condo:Insurance $2,000Mortgage interest 6,500Property taxes 2,000Repairs &maintenance 1,400Utilities 2,500Depreciation 14,500During the year, Alexa rented out the condo for 100 days. She did not use the condo at all for personal purposes during the year. Alexa’s AGI from all sources otherthan the rental property is $200,000. Unless otherwise specified, Alexa has no sources of passive...

  • During the current year M sold all of her class 10 property to Q Inc., a...

    During the current year M sold all of her class 10 property to Q Inc., a corporation controlled by M. The property, which originally cost $120,000, was valued at $60,000. The UCC of class 10 at the beginning of the current year was $80,000. What is the amount of the decrease to M’s net income for tax purposes, if any, for the current year as a result of the sale of the class 10 property?

  • PLEASE DO ON WORD DOCUMENT. THANK YOU. Section B - Multiple Choice Where a calculation is...

    PLEASE DO ON WORD DOCUMENT. THANK YOU. Section B - Multiple Choice Where a calculation is required, 1 mark will be given for the correct answer and 1 mark for the correct calculation. Question 8 (2 points) A business acquires a rental property several years ago for $665,000, with $150,000 of this amount being the estimated value of the land. At the beginning of the current year the UCC for the property is $437,165. During the current year, the property...

  • 1) Michael sells Sec. 1231 property this year, resulting in a $4,000 gain. This is the...

    1) Michael sells Sec. 1231 property this year, resulting in a $4,000 gain. This is the first time he has disposed of any Sec. 1231 property. Michael’s tax rate is 10%. His tax on the Sec. 1231 gain will be A) $0. B) $400. C) $600. D) $1,120 2. During the current year, LaVone recognizes a $30,000 Sec. 1231 gain on sale of land and a $18,000 Sec. 1231 loss on the sale of land. Prior to this, LaVone's only...

  • On July 2, 2019, Vicuna Inc. purchased equipment for $720,000. This equipment has an estimated useful...

    On July 2, 2019, Vicuna Inc. purchased equipment for $720,000. This equipment has an estimated useful life of six years and an estimated residual value of $30,000. Depreciation is taken for the portion of the year the asset is used. The asset is a Class 8 asset with a maximum CCA rate of 20%. Vicuna has a December year end. Instructions a) Complete the schedule below by determining the depreciation expense/CCA and year-end book values/UCC for 2019 and 2020 using...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT