- 22 -
Specifically, the lease contains the following sublease
provision:
MCA shall pay the Museum a lease fee equal to twenty-
five percent (25%) of all Sublease Rentals. As used in
this Agreement, "Sublease Rentals" means all receipts
realized by MCA from the subletting of the Amphi-
theatre, less all out-of-pocket expenses (including,
but not limited to, supplies, utilities and personnel
costs) incurred by MCA as a direct result of the sub-
letting * * *.
Further, respondent notes that, in 1988, a Budweiser-sponsored
event was held, and a portion of the profits, as calculated under
this provision, was remitted to the Museum. The Museum does not
dispute that the fees from the Budweiser-sponsored event were
paid to the Museum but contends that the total fees involved
amounted to only $836, an insubstantial amount in comparison to
the whole lease, and, therefore, this small amount should not
"taint" the whole lease.5
The statutory language upon which respondent relies is very
clear. Section 512(b)(3)(B)(ii) provides that the exclusion of
rents from UBTI shall not apply "if the determination of the
amount of such rent depends in whole or in part on the income or
profits derived by any person from the property leased" (emphasis
added). The Museum does not argue that the amount remitted under
5In support of this assertion, the Museum cites Kentucky Bar
Found., Inc. v. Commissioner, 78 T.C. 921 (1982); Policemen's
Benevolent Association of Westchester County, Inc. v. Commis-
sioner, T.C. Memo. 1981-679. The cases do not touch upon sec.
512 and are therefore inapposite.
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