Soft,Inc.,a § 501(c)(3)organization,has been leasing a building to Polar,Inc.,a taxable entity,for 15 years.The lease terminates in the current tax year.Soft's adjusted basis for the building is $225,000.It sells the building to the Development Partnership,a taxable entity,for $440,000.Selling expenses are $14,000.
a.Calculate the effect of the sale on Soft's UBTI.
b.Assume instead that Development Partnership is a tax-exempt entity. Calculate the effect of the sale on Soft's UBTI.
Correct Answer:
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