UBI, UBTI, and UBIT – Understanding the Unrelated Business Income Tax
Nonprofits have a fear. Nonprofits have a misunderstanding. Nonprofits need guidance.
In 1950 Congress created the unrelated business income tax (UBIT), because it did not want nonprofits to have advantages over taxable entities that conduct the same activities. The tax was used to penalize nonprofits for engaging in excessive unrelated business activities.
The law is confusing and is often misinterpreted by organizations and their tax professionals. Most organizations have unrelated business income (UBI), but not all of the UBI is considered unrelated business taxable income (UBTI). Many organizations that have UBTI will not have to pay unrelated business income tax (UBIT), because they have related deductions that offset the income.
Stu Sobel, the author of four books on taxation and nonprofit issues, has worked with thousands of nonprofit clients throughout the world. In this course he shares his wisdom to make this difficult area of tax law less threatening and confusing. He makes taxation less taxing.
The following topics are discussed in detail:
- What constitutes a trade or business
- Analysis of specific forms of UBI and UBTI
- Case studies regarding advertising revenue
- Statutory exclusions from UBTI
- Religious organizations and UBTI issues
- Unrelated debt finance income
- Preparation of Form 990-T – overview of the form by lines and schedules
- Understand the differences between UBI, UBTI, and UBIT
- Effectively plan for activities and advise clients
- Determine recent tax law developments that impact on unrelated business taxable income
Understand Internal Revenue Service policies and practices as they relate to enforcement of the UBIT
CPE Credit: 2 hours
NASBA & IRS Field of Study: Taxes