Mr. Slumlord owns and operates rental properties. The information relating to these properties

for the year ended December 31, 2018 is as follows:

Building A Building B Building C Appliances

Class 1- 4% Class 3-5% Class 3-5% Class 8-20%

Capital Cost $140,000 $495,000 $125,000 $ 15,000

UCC @ Dec. 31, 2017 $120,000 $490,000 $115,000 $ 3,000

Proceeds of Sale N/A * see note N/A * see note

Rent revenues $ 12,000 $ 40,000 $ 10,000

Disbursements:

Property taxes $ 2,800 $ 9,900 $ 2,500

Insurance 820 2,600 780

Repairs 3,300 8,500 2,200

Mortgage interest 1,700 3,400 1,500

Mortgage principal 6,700 8,425 3,375

Superintendent

Salaries 20,000

Legal fees on sale

of property 4,000

Cost of addition to

Building A 25,000

Page 4 of 5 BTAX1 -TEST #2 Michelle Paquin

Question #2 (continued)

* Note:

On November 15, 2018, Building B, the land on which it sits and the appliances contained within

the building were sold for total proceeds of $637,500. The selling expenses are noted above in

the list of disbursements. The proceeds of sale and the related selling expenses were not

separately allocated to Land, Building and Appliances, according to the information provided in

the legal sale document. However, a competent appraiser assessed the property and provided the

following values:

Land (original cost was $135,000) $130,000

Building 520,000

Appliances -0-

The appliances sold with Building B were the only assets contained in Class 8 - in other words,

there were no Class 8 assets remaining as at December 31, 2018.

REQUIRED:

(a) Using proper format, Statement of Rental Income for the year ended December

31, 2018, to be filed by Mr. Slumlord with his 2018 personal income tax return

(b) Calculate any taxable capital gain or allowable capital loss with respect to the sale of the

rental property, which Mr. Slumlord will have to report on his 2018 personal income tax

return. (Remember that with the sale of real estate, you can not "lump" everything into one

calculation!)

(c) Complete the CCA schedule to accompany the statement of rental income from part (a).