At the end of the current year, Fred owned two residential rental properties

Subject:AccountingPrice:2.86 Bought12

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At the end of the current year, Fred owned two residential rental properties. Rental property #1 cost $125,000 (land $50,000; building $75,000) and at the close of last year had a UCC of $64,000. Rental property #2 was acquired in the current year for $210,000 (land $80,000, building $130,000). Revenue and expenses for the rental properties during the year were as follows:

 

                                                                       Property #1    Property #2      Total

 

           Revenue                                            $13,200           $4,500         $17,700

           Expenses:      

Mortgage interest                            (0)           (3,000)          (3,000)

Repairs & maintenance            (5,000)                  (0)         (5,000)

Property tax                              (3,100)            (1,000)         (4,100)

Insurance                                       (500)            (200)           (700)

                                                   (8,600)         (4,200)         (12,800)

           

Income                                                  $ 4,600          $  300        $ 4,900

Determine the maximum CCA deduction for the rental properties for the current year. Income tax reference:  Reg. 1100(11), 1101(1ac).