Reference no: EM131960185

Question - In April, 2015, John Johnson acquired a four-unit apartment building, for a total cost of $ 850,000. Of this total, it is estimated that the land on which the building is situated is worth $ 270,000. The units in the apartment are similar in size and, for purposes of allocation to a CCA class, the property is considered to be a single asset.

Two of the units will be rented on a furnished basis. Consequently, in 2015, John Johnson acquired furniture at a cost of $ 60,000.
During May, 2015, all of the units were rented for the remainder of the year. For this year, the units generated rents of $ 80,000 and expenses, other than CCA, of $ 40,000 were incurred

In January, 2016, the tenants in both of the furnished units terminated their leases and moved out. Because John Johnson was unable to find tenants who were interested in furnished units, the two units remained empty for four months. Given this situation, John Johnson sold all of the furniture for $ 32,000.

During 2016, the units generated rents of $ 67,000. Expenses for the year, other than CCA, totaled $ 31,000.

John Johnson deducted the maximum CCA allowable in both 2015 and 2016.

Required: Calculate the Net Rental Income for each of the two years 2015 and 2016 Also, determine John Johnson' UCC balances on January 01, 2017. Include in your solution any tax consequences associated with the sale of the furniture.