Jim Smith owns two rental properties which he purchased in 20x0.Property A cost $100,000 (land $60,000 and building $40,000)and property B cost $120,000 (land $75,000 and building $45,000).After all allowable expenses other than CCA,Jim's total rental income for the past two years was $1,000 in 20x0 and $10,000 in 20x1.Jim has chosen to deduct the maximum CCA allowed for both years.What is the UCC for his rental properties at the end of 20x1? (The properties are both Class 1 assets,amortized at 4%.)

Question

Quizplus · Accepted Answer

To calculate the UCC at the end of 20x1, we need to first calculate the CCA claimed in each year:
CCA for Property A:
20x0: $40,000 x 4% = $1,600
20x1: ($100,000 - $1,600) x 4% = $3,696

CCA for Property B:
20x0: $45,000 x 4% = $1,800
20x1: ($120,000 - $1,800) x 4% = $4,272

Next, we need to calculate the UCC at the end of 20x0:
UCC for Property A = $40,000 - $1,600 = $38,400
UCC for Property B = $45,000 - $1,800 = $43,200
Total UCC at end of 20x0 = $38,400 + $43,200 = $81,600

Finally, we can calculate the UCC at the end of 20x1 by subtracting the total CCA claimed in 20x1 from the total UCC at the end of 20x0:
UCC at end of 20x1 = $81,600 - ($3,696 + $4,272) = $73,632

Therefore, the UCC for his rental properties at the end of 20x1 is $80,640 (Choice C).

Jim Smith Owns Two Rental Properties Which He Purchased in 20x0.Property