In many states, such losses may be used against future unrelated business income
, so establishing their existence is important.
The tax on such unrelated trade or business revenue is called the unrelated business income
tax, or UBIT.
Title-holding companies are allowed to generate a de minimis amount of unrelated business income
without losing their tax exempt status under certain circumstances.
Figure D shows financial items for Tax Year 2008, including gross unrelated business income
and its components, the ratio of investment income to gross unrelated business income
, total deductions, and unrelated business income
Still, they may have some potential reporting and taxation obligations, such as unrelated business income
taxes (UBIT) and employment taxes.
The Tax Court agreed with the IRS that the association's receipts of about $877,000 in the years at issue were taxable unrelated business income
and not nontaxable royalty income.
IRS representatives have expressed concern that these payments caused Unrelated Business Income
amount, did not affect a filer's unrelated business income
Revenues from shared-branching arrangements are among the items subject to the unrelated business income
tax, according to an IRS technical advice memorandum.
512(b)-1(1)(3) adds that the taxable income of a taxable controlled entity equals the greater of taxable income or taxable income less any income that would not be unrelated business income
of the controlling organization (excess taxable income).
This body of law concluded that sponsorship revenue is not taxable as unrelated business income
as long as the recipient merely acknowledges the support, by referencing only the corporation's name and logo.
Advertising is normally taxed as unrelated business income
, while qualified sponsorship payments escape tax.