Joint Ventures Involving Tax-Exempt Organizations, 4th Edition

CHAPTER 8The Unrelated Business Income Tax

1. § 8.1 Introduction
2. § 8.3 General Rule
3. § 8.4 Statutory Exceptions to UBIT (Revised)
4. § 8.5 Modifications to UBIT (Revised)
5. § 8.7 Calculation of UBIT (Revised)

§ 8.1 INTRODUCTION

(b) Impact of UBIT and Reporting Trends

p. 579. Delete the first three sentences of this subsection and replace with the following (note that footnote 8 is deleted):

According to the Fall 2014 Statistics of Income Bulletin, reporting on information for the 2010 reporting year, 43,184 exempt organizations filed Form 990-T with $11 billion received as gross UBI, offset by $10.8 billion in deductions.⁵ Two percent more tax-exempt organizations filed the Form 990-T for 2010 and reported $341.3 million in unrelated business income tax liability.⁶ Total unrelated business income tax liability increased 28 percent from 2009.⁷

p. 579. In footnote 9, delete www.irs.gov.

p. 579. Insert the following to the end of the paragraph:

The primary reasons for the increases were disallowing expenses that were not connected to unrelated business activities, lack of profit motive, improper expense allocation, errors in computation or substantiation, and reclassifying exempt activities as unrelated. The majority of the adjustments came from the following activities: fitness, recreation centers, and sports camp; advertising; facility rentals; arenas; and golf.^9.1

§ 8.3 GENERAL RULE

(b) The Definition of “Unrelated Trade or Business”

(i) Trade or Business.   p. 585. Insert ...