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514(c)(1)), the trustee could run into UBTI problems.
512(b) generally excludes most forms of investment income from UBTI for certain charitable organizations.
Tax-exempt organizations generate UBTI if the income-producing activity is performed regularly and doesn't substantially further its overall tax-exempt mission (IRC [section]513).
SMAs often generate UBTI and may not be appropriate for qualified accounts or tax-exempt investors.
If the fund is a partnership for tax purposes its borrowing is attributed to the partners, giving rise to UBTI exposure for tax-exempt investors.
Moreover, UBTI is managed and reduced through a properly structured lease agreement which is intended to shift income (in the form of non-UBTI rental income) to PropCo.
If any amount attributable to income set aside tax free is used for any purpose other than one entitling the set-aside to tax-free treatment, the amount will generally be treated as UBTI.
UBTI is the gross income derived by any exempt organization from any unrelated trade or business it regularly carries on less the deductions allowed reduced by the deductions directly connected with the carrying on of such trade or business.
Essentially, UBTI is income received by the tax-exempt organization or entity that is unrelated to its tax-exempt purpose.
The tax benefit will be claimed by the shareholder and UBTI risk will no longer be a problem.
Website Sponsorship Arrangement Involving Exempt Organization Generally Were Not UBTI, 98 J.
5) The Code defines UBTI as the gross income derived from any unrelated trade or business within the meaning of section 513.