Question

6. Rattler, Inc., an exempt organization, trains disabled individuals to design web pages. Rather than hold a traditional graduation exercise, the graduates compete in a web design contest. Such activities are held four times each year. An admission fee of $10 is charged to the general public to attend the contest. Eight hundred people attended the contest this year, and prizes of $2,000 were given to the top 3 graduates. Calculate the amount of Rattler’s unrelated business income from this activity.

Answer 1

Computation of Unrelated business income
Revenue ($10 x 800)	$8,000
Less: Cost of prizes distributed ($2000 x 4)	$8,000
Unrelated business income	$0
As the activities are held 4 times in a year and $2000 prizes are given to the
top 3 graduates, total of $8000 ($2000 x 4 times) are awarded to the top 12
graduates in the year.