City, Inc, an Exempt Organization, Has Included Among Other Amounts the the Following

question 68

Essay

City, Inc., an exempt organization, has included among other amounts the following in calculating net unrelated business income of $500,000. $\begin{array}{lr}\text { Dividend income } & \$ 12,000 \\\text { Interest income } & 6,000 \\\text { Royalty income } & 15,000 \\\text { Rent income from } & \\\text { equipment } & 25,000\end{array}$ The only expenses incurred associated with these items are rental expenses which includes depreciation of $10,000)
of $15,000. Calculate City, Inc.'s UBTI.

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Definitions:

Accounting Profits

Net income reported on a company's financial statements, calculated as total revenues minus explicit costs, excluding opportunity costs.

Economic Profits

The surplus remaining after total costs are subtracted from total revenues, taking into account both explicit and implicit costs.

Accounting Profits

The difference between total revenue and explicit costs; the net income a firm reports on its income statement.

Total Costs

The aggregate of all expenses associated with manufacturing products or services, which includes fixed and variable costs.