Background
A tax-exempt organization that regularly carries on a trade or business that is unrelated to its exempt purpose is typically subject to unrelated business income tax (UBIT) [I.R.C. § 512(a)(1)]. Dividends, interest, royalties, rents, and capital gains are generally excluded from unrelated business taxable income (UBTI) [I.R.C. § 512(b)(1), (2), (3), and (5)]. However, when the assets giving rise to these forms of income are subject to acquisition indebtedness at any time during the tax year, a portion of