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: 
How should Paul treat this transaction on his 2012 Schedule E?
A) Rental income of $3,600 and rental expenses of $3,600.
B) No rental income or rental expenses are to be reflected on the Schedule E because the net effect is 0.
C) Rental income of $3,600 and depreciation computed on the capital expenditures of $3,600.
D) Rental income of $3,600, rental expenses of $1,700, and depreciation computed on the capital expenditures of $1,900.
Correct Answer:
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