For example, if an
exempt organization invested in a partnership that generated gross income by operating a factory and the partnership also received dividend income from a corporate investment, the
exempt organization would report only the factory income as UBTI (Regs.
In Revenue Ruling 98-15, the Service considered two different factual scenarios in which an
exempt organization formed a limited liability company with a private entity.
Almost as an aside, the Ruling concludes that payments for the use of parking spaces would not be excluded from unrelated business taxable income under IRC Section 512(b)(3) if the taxpayer were an
exempt organization.
Whole joint ventures involve all or substantially all of the assets of an
exempt organization.
Many states allow an
exempt organization to carry over a net operating loss but may impose additional restrictions or modifications.
Tax
exempt organizations (EO) were generally not required to file the new form at the time they apply for tax exempt status, said Williams.
To determine the time span of the activity, the Tax Court considered the business of selling advertising space and decided that, for the purposes of determining whether the organization "regularly carried on" the business of selling program advertising, the program publisher's activities should be attributed to those of the
exempt organization.
Government officials, including members of Congress, Treasury and IRS officials, and state attorneys general, have focused attention on income-producing
exempt organization activities.
Partnerships, generally, and low-income housing partnerships, specifically, have been controversial in the
exempt organization world for a long time.
Correction, under the act, means undoing the excess benefit to the extent possible and taking any additional measures necessary to place the
exempt organization in a financial position not worse than it would have been if the disqualified person were dealing under the highest fiduciary standards.
The filing
exempt organization is required to report only the activities that it performed directly, or those performed indirectly through a disregarded entity or joint venture taxed as a partnership.
