Swan, Inc., a tax-exempt organization, leases a building and equipment to ABC Corporation. The rental income from the building is $240,000 and from the equipment is $18,000. Rental expenses are $150,000 for the building and $16,500 for the equipment. What adjustment must be made to net unrelated business income?
A) $0.
B) ($16,500).
C) ($18,000).
D) ($91,500).
E) Some other amount.

Question

Quizplus · Accepted Answer

To calculate unrelated business income, we need to subtract the rental expenses from the rental income. 
Total rental income = $240,000 + $18,000 = $258,000 
Total rental expenses = $150,000 + $16,500 = $166,500 
Unrelated business income = $258,000 - $166,500 = $91,500 
Therefore, an adjustment of ($91,500) must be made to net unrelated business income.

Swan, Inc, a Tax-Exempt Organization, Leases a Building and Equipment to to ABC