On May 1, 2020, Charles Corp. leased equipment to Darwin Inc. for one year under an operating lease. Instead of leasing it, Darwin could have bought the equipment from Charles for $800,000 cash. At this time, Charles's accounting records showed a book value for the equipment of $700,000. Depreciation on the equipment in 2020 was $90,000. During 2020, Darwin paid $22,500 per month rent to Charles for the 8-month period, and Charles incurred maintenance and other related costs under the terms of the lease of $16,000. The net income before income taxes reported by Charles from this lease for the year ended December 31, 2020, should be

$180,000.

$164,000.

$90,000.

$74,000.