Maroon, Inc., a tax-exempt organization, leases a building and equipment to Brown Partnership. The rental income from the building is $100,000 and from the equipment is $9,000. Rental expenses are $40,000 for the building and $4,000 for the equipment. What adjustment must be made to net unrelated business income?
A)$0
B)($60,000)
C)($65,000)
D)($109,000)
E)Some other amount.

Question

Quizplus · Accepted Answer

The rental income from both the building and equipment is unrelated business income. The rental expenses from both the building and equipment are deductible in determining unrelated business taxable income. Therefore, Maroon, Inc.'s net unrelated business income is $65,000 ($100,000 building rental income - $40,000 building rental expenses + $9,000 equipment rental income - $4,000 equipment rental expenses).