Hope, Inc., an exempt organization, owns a factory building that it leases to a taxable corporation for $150,000 per year. Related expenses for Hope are $40,000. Hope's average acquisition indebtedness on the building is $500,000 and the average adjusted basis is $750,000. Calculate Hope's unrelated debt-financed income and expenses. Then indicate the effect of these items on unrelated business taxable income.

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The Answer of Hope, Inc., an exempt organization, owns a factory building that it leases to a taxable corporation for $150,000 per year. Related expenses for Hope are $40,000. Hope's average acquisition indebtedness on the building is $500,000 and the average adjusted basis is $750,000. Calculate Hope's unrelated debt-financed income and expenses. Then indicate the effect of these items on unrelated business taxable income.

Hope, Inc, an Exempt Organization, Owns a Factory Building That It