Essay by Columbine Quillen
Mountain Life – December 2002 – Colorado Central Magazine
THE ICE PALACE INN in Leadville could be yours for only $230 — and a bit more.
Giles and Kami Kolakowski, the owners of the Leadville bed and breakfast are sponsoring an essay contest in which the winner will take over the ownership and maintenance of the inn including all of its furnishings. The Kolakowskis say they want to move to Seattle, Washington so that they can be closer to their family — and they have decided that this is the best way to enable someone else to live his or her dream.
It may also prove very profitable. According to the rules, for the contest to proceed, the Kolakowskis must receive 2,500 entries. This equals $575,000. In 2000, their inn was assessed at $212,849, and the Kolakowskis state that a similar inn sold three years ago for $420,000.
The Ice Palace Inn has five rooms all decorated in an ornate Victorian style. Each room has its own bath, fireplace, and television. The only other comparable property for sale in Leadville right now is the Alps Motel which is twice as big, and has a caretaker’s unit. It’s listed for sale at $395,000.
If the contest doesn’t take place, the Kolakowskis will refund $200 and keep $30 for processing fees. So if they only get 2,000 entries, they will still make $60,000.
The essay topic is: “Why I want to Own the Ice Palace Inn.” The essay has to be 150 words, maximum, and written in English. (If you wonder what 150 words look like, so far you have already read more than 225 words.)
The Kolakowskis will chose the best 100 essays and then pass those on to a panel of judges. Although the judges have not been chosen yet, the couple has asked Regis Philbin, Kelly Ripa, Oprah, and David Letterman to judge the essays.
“If our ‘Dream Judges’ are unable to do it, we will have Colorado historians who have a love for Leadville and its history, particularly The Ice Palace of 1896,” Giles said.
Once the winner has been chosen, the Kolakowskis will present the winner with the Attorney’s Certificate of Title.
The new owner will have to pay estate transfer taxes, income taxes, lawyer’s fees, and any other fees accrued from winning the property, but not the hefty gift tax imposed on winnings such as the lottery. “We would advise the winner to have an accountant to help work through any tax ramifications,” Giles said.
So how much will the inn actually cost?
We asked Dave Wancura, Colorado Central’s accountant, what taxes the new owner would owe, and he said he couldn’t be entirely sure without research, but it made sense to him that the transaction would be taxed as income, like the lottery, rather than as a gift.
Assuming that’s right, and that the inn is valued at about $400,000 (including all furnishings), the new owner’s income tax will be for that amount minus the $230 entree fee. Presumably, the winner will also be taxed for at least another $20,000 to $60,000 in income he earned that year. But it’s impossible to know what deductions, expenses and/or losses he’ll incur.
THEREFORE IT’S IMPOSSIBLE to say exactly how much the Ice Palace will cost. But the new owner should expect to owe at least $135,000 in federal income tax (calculated by consulting the IRS website, although that figure may be considerably higher or lower due to specific variables) plus state taxes, and legal and accounting fees. And there will, of course, be utilities and expenses to pay before the guests come rolling in.
For the winner — presuming there are enough entrants and there is a winner — the contest may turn out to be a stroke of luck. But the inn isn’t going for a mere $230, so entrants should consult legal and financial advisors — and will definitely need to have some capital available in order to succeed.
But the new owner can move right into the owner’s quarters, which includes a modern kitchen, one bedroom, a small sitting area, a bath, a laundry, a hot tub, and a two-car garage. And the Kolakowskis will train you to run an Inn and give you all of their breakfast recipes.
According to the contest rules, the winner must run the business as a Victorian Inn for six months, but after six months, the owner may do whatever he or she wishes with it. The Kolakowskis net $65,000 each year from running the inn.
However, the Kolakowskis have not received the necessary number of entries thus far. “That is very normal, as most people will enter during the last month of the contest,” Giles said.
The Ice Palace Inn is named for the famous historic Ice Palace that melted only months after it was built. To enter the contest, you can go on line at www. icepalaceinn.com or call 800-486-0345.
Columbine Quillen ends up writing for Colorado Central when she’s living in Salida.
