Unrelated Business Income


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Unrelated Business Income

Income a nonprofit organization produces on a regular basis from a trade or business that is not connected to its ordinary operations. For example, a charity may sell t-shirts at a profit to the general public. While there are a number of exemptions, the IRS taxes unrelated business income at ordinary corporate tax rates.
References in periodicals archive ?
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 tax.
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 Tax (UBIT).
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.