Question
Jerry, a general contractor by trade, is a tenant of Montgomery Apartments. In exchange for four months rent ($900/month), Jerry provided the following items and
Jerry, a general contractor by trade, is a tenant of Montgomery Apartments. In exchange for four months rent ($900/month), Jerry provided the following items and services for Paul, the owner of the apartments:
Paint and miscellaneous supplies for the apartments | $ 700 | |
Labor for painting and miscellaneous repairs | 1,000 | |
Labor and supplies for paving the apartment parking area | 1,900 |
How should Paul treat this transaction on his 2018 Schedule E?
Rental income of $3,600 and rental expenses of $3,600. | ||
No rental income or rental expenses are to be reflected on the Schedule E because the net effect is 0. | ||
Rental income of $3,600 and depreciation computed on the capital expenditures of $3,600. | ||
Rental income of $3,600, rental expenses of $1,700, and depreciation computed on the capital expenditures of $1,900. |
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