Ice, Inc., a § 501(c)(3) organization, has been leasing a building to Soft, Inc., a taxable entity, for 15 years. The lease terminates in the current tax year. Ice'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 $26,400.
a. Calculate the effect of the sale on Ice's UBTI.
b. Assume instead that Development Partnership is a tax-exempt entity. Calculate the effect of the sale on Ice's UBTI.

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The Answer of Ice, Inc., a § 501(c)(3) organization, has been leasing a building to Soft, Inc., a taxable entity, for 15 years. The lease terminates in the current tax year. Ice'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 $26,400.
a. Calculate the effect of the sale on Ice's UBTI.
b. Assume instead that Development Partnership is a tax-exempt entity. Calculate the effect of the sale on Ice's UBTI.

Ice, Inc, a § 501(c)(3) Organization, Has Been Leasing a Building