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
4. § 8.5 Modifications to UBIT
5. § 8.7 Calculation of UBIT (Revised)

§ 8.1 INTRODUCTION

(a) The Rising Tide of Commercialism

p. 578. Insert the following in the body of the text after footnote 3, before the last sentence in the first paragraph:

During the COVID-19 pandemic,^3.1 as families shelter in place, Christian streaming services in particular are seeing a rise in viewership and membership.^3.2

EXAMPLE

RightNow Media, an online streaming platform that features hundreds of hours of Christian teaching and Bible-focused content for children, had 10,000 new subscribers join in April 2020.^3.3 The ministry specifically markets its streaming service to churches and the church leaders then offer their congregants free access.^3.4

Accordingly, a UBIT issue may arise for the churches if the so-called “donations” are viewed by the IRS as equivalent to subscription fees for digital goods. Not only may there be UBIT, but many states now tax the streaming of digital goods for state and local tax sales and use tax purposes.^3.5

(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 ...