An Exempt Organization Owns a Building for Which Its Adjusted

question 48

Essay

An exempt organization owns a building for which its adjusted basis is $100,000 at the beginning of the year and $90,000 at the end of the year.One-half of the ground floor is leased to a commercial venture for $10,000 per year.The remainder of the first floor and all of the second floor are used by the exempt organization in carrying out its mission.When the exempt organization constructed the building 20 years ago, it incurred a mortgage of $150,000.The final payment of this mortgage was made in December of the current year.The average acquisition indebtedness for the current year is $30,000.Determine to what extent the building is debt-financed property, the amount of debt-financed income, and the portion of debt-financed income that is treated as unrelated business income.

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Definitions:

Rule 10b-5

Rule 10b-5, under the United States Securities Exchange Act of 1934, is a regulation prohibiting fraudulent practices in securities trading, including misrepresentation and insider trading.

Insider Information

Confidential information about a company or its securities that has not been made public and that could provide a financial advantage in the market.

Plain English TERM SHEET

A document outlining the key terms and conditions of an investment, written in clear, straightforward language.

Tender Offers

Public, open proposals by an entity or individual to purchase a substantial percentage of a company's shares or bonds at a specified price, often in an effort to gain control of the company.