Article Archives >> Ready Reference >> September 1998
Preview of Article:
Nonprofits Often Worry About UBIT – Part I and II
Income generating activity is "unrelated" if it does not "contribute substantially" to the exempt purpose
Excerpt:
Since a nonprofit organization is usually subject to unrelated
business income tax (UBIT) on income from a trade or business which
is regularly carried on and which is "unrelated" to its
exempt purpose, it is critical to determine whether an activity
is "related" to the organization’s exempt purpose.
According to the Regulations, an activity is deemed to be unrelated if it is "not substantially related," other than through the production of funds, to the exempt purpose of the organization. To be substantially related, the activity must "contribute importantly to the accomplishment" of the exempt purposes.
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Article Archives >> Ready Reference >> September 1998
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