Calculate the effect of the equipment lease

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Tranquility, Inc., an exempt organization, leases factory equipment to Blouses, Inc. Blouses is a taxable entity that manufactures women's clothing for distribution through upscale department stores. Blouses own the land and building where it conducts its manufacturing operations. The original cost of the building to Blouses was $800000, and the cost recovery deduction for the current year is $20512. Rent income to Tranquility for the factory's equipment is $300000, and the related expenses are $170000. Calculate the effect of the equipment lease on Tranquility's unrelated business taxable income.

Reference no: EM13130907

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