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)

Question

Quizplus · Accepted Answer

The net unrelated business income is calculated by subtracting the expenses from the income for both the building and the equipment. For the building, the income is $100,000 and the expenses are $40,000, resulting in a net income of $60,000. For the equipment, the income is $9,000 and the expenses are $4,000, resulting in a net income of $5,000. Adding these together, the total net unrelated business income is $65,000, which is the adjustment that must be made.