UBIT Silos: Final Regulations

Published on: November 22, 2020November 22, 2020 by Gene Takagi

Earlier this week, Treasury posted an advance copy of the final regulations addressing how a tax-exempt organization subject to unrelated business income tax (UBIT) determines if it has more than one unrelated trade or business, and, if it does, how it calculates unrelated business taxable income (UBTI). The final regulations make minor modifications to the […]

UBIT Silos: Proposed Regulations

Published on: April 26, 2020April 26, 2020 by Gene Takagi

On April 24, 2020, the IRS and Treasury Department published proposed regulations under the law commonly referred to as the Tax Cuts and Jobs Act (TCJA) that provide guidance on how a tax-exempt organization subject to unrelated business income tax (UBIT) determines if it has more than one unrelated trade or business, and, if it […]

IRS Guidance on UBIT Silos – 512(a)(6) – PART II

Published on: September 13, 2018 by Gene Takagi 1 Comment

In Part I of this two-part article on IRS Notice 2018-67 regarding the calculation of unrelated business taxable income (UBTI) under the Tax Cuts and Jobs Act (TCJA), we discussed the need to separate different lines of unrelated business activities, which is now required to calculate an organization’s unrelated business income tax (UBIT). In Part II, we focus on special […]

Whaaat?! Nonprofits need to pay taxes for providing employee parking!

Published on: August 2, 2018December 24, 2019 by Gene Takagi

Thanks to the Tax Cuts and Jobs Act (TCJA), if your nonprofit provides parking to its employees, it may now need to pay unrelated business income tax (UBIT) on the value of that parking benefit. That’s right – your tax-exempt organization may now need to pay income tax on an expense. Unrelated business income is the […]

Nonprofit Radio: Unrelated Business Income Tax and Fringe Benefits

Published on: May 30, 2018August 2, 2018 by Gene Takagi

I’ll be on Nonprofit Radio this Friday, June 1, at 10:30 am PT / 1:30 pm ET talking with host Tony Martignetti about the unrelated business income tax and how charities who provide certain transportation- or parking-related fringe benefits to their employees may now be required to pay the tax even if they have no unrelated business income. Basics […]

UBIT – Issues for Shared Spaces

Published on: November 17, 2014November 17, 2014 by Erin Bradrick

I will be speaking this week for The Nonprofit Centers Network on unrelated business income tax (“UBIT”) related issues faced by nonprofits providing shared space with other individuals or entities (you can register for the webinar here). As we’ve discussed in previous posts on UBIT, generally, net income from unrelated business activities will be […]

UBIT: Advertisements vs. Qualified Sponsorship Payments

Published on: March 13, 2014March 17, 2023 by Erin Bradrick 7 Comments

Generally, net income from unrelated business activities will be subject to the unrelated business income tax (”UBIT”) if the activity constitutes (1) a trade or business, (2) that is regularly carried on, and (3) is not substantially related to the furtherance of the organization’s exempt purpose. The IRS considers soliciting, selling, and publishing commercial advertising […]

Unrelated Business Taxable Income – What Doesn’t Count?

Published on: October 17, 2013February 25, 2014 by Erin Bradrick 1 Comment

Revenues created by business ventures of nonprofits can result in unrelated business taxable income (“UBTI”) subject to the unrelated business income tax (“UBIT”), but it’s important to understand that not all revenues generated by unrelated businesses are subject to UBIT. And to be clear, if you have no UBTI, you owe no UBIT. We have […]

Unrelated Business Income and the Commerciality Doctrine

Published on: August 23, 2013February 25, 2014 by Erin Bradrick 1 Comment

As is clearly determined (and as we’ve discussed several times on the Nonprofit Law Blog), in order to establish and maintain tax exemption under Section 501(c)(3), an organization must be primarily operated for an exempt purpose. What is less clearly determined, however, is when a 501(c)(3)’s tax exempt status may be at jeopardy by operation […]

Unrelated Business Income Tax Explained

Published on: July 23, 2013August 18, 2020 by Michele Berger 2 Comments

In order to qualify as a tax-exempt organization under IRC Section 501(c)(3), an organization must be operated primarily for tax-exempt purposes. This parameter allows such nonprofit organizations to engage in a limited amount of business activity unrelated to the organization’s exempt purposes. Although a public charity generally does not pay taxes on income from activities […]