Nonprofit Law Podcast #29: Unrelated Business Income

Unrelated Business Income


Download: Nonprofit Law Podcast #29 (mp3, 9:41)

Shownotes

Intro

Tim Mooney… Welcome to the Nonprofit Law Podcast
Your guide to the laws impacting nonprofits.
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News & Notes
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Unrelated Business Income
- Listener suggestion: issues regarding the parking garage run by a nonprofit - is it subject to taxation?
- Any income an organization receives from a regular trade or business that is not substantially related to the organization's exempt purposes.
- trade or business can be a small part of overall work (i.e. NYU and Mueller Spaghetti)
- regularly carried on: has a frequency (not a one-shot)
- substantially related - if the sales don't somehow advance the exempt purposes of the organization
- IRS uses facts and circumstances analysis
- Affects most 501(c) organizations
- Subjects them to a tax - "UBIT"
- New rule: organizations have to make their UBIT returns (Form 990T) available to the public!
- Examples
- membership list sales: UBIT
- pet boarding by an anti-cruelty org: UBIT
- art museum gift cards with art: not UBI
- newsletters/magazines: can go either way (depends on whether the articles cover the exempt purpose)

Resources
IRS: Publication 598 (PDF - newly updated)
IRS: UBI defined
BoardSource: What is UBIT?

Closing

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This podcast provides general information about legal topics but it is not a complete discussion of all legal issues that arise in relation to nonprofits nor is it a substitute for legal advice. This podcast does not create an attorney-client relationship. This is general legal information and the contributors make no warranties regarding the general legal information provided in this podcast , and disclaim liability for damages resulting from its use to the fullest extent permitted by the applicable law