115 so that it can avoid unnecessary returns or the imposition of tax through UBIT
or as a fully taxable entity.
Income or loss of an exempt organization is subject to UBIT
unconvincing because (1) UBIT
does not apply to activities related to
Some financial advisors suggest that the UBIT
should not discourage investors from investing their retirement fund in an MLP because the UBIT
arises only when total net income is more than $1,000 in a year.
buying commercial real estate and businesses), Congress passed UBIT
as a way to protect taxable businesses against unfair competition from tax exempt entities.
107) As a result of the sophisticated use of exceptions, deductions, and separate entities, and perhaps charities' fears about entering commercial ventures due to exemption risk, the UBIT
collects relatively little revenue (108) Yet, its message remains obvious: commercial activity is suspect and charities who engage in it will be subject to scrutiny and doubt.
16) Thus, for example, tuition payments received by Harvard from the provision of educational services would not be subject to the UBIT
since the provision of educational services furthers (and indeed is) the institution's purpose that justifies exemption from tax.
Because the advertising exploits the exempt function of the periodical, which is to educate your readers, the law gives you a possible break in computing UBIT
A second tax issue with FIN 48 implications is UBIT
for not-for-profit organizations.
Because VEBAs for non-collectively bargained employees are subject to UBIT
, they are typically funded one of three ways to manage taxes: 1) with funds that use a tax-managed strategy; 2) with VEBA (or Trust)-Owned Life Insurance (TOLI or VOLI); or 3) with a unique concept called VEBA-Owned Health Insurance (VOHI).
For tax years beginning after December 31, 1950, UBIT
was imposed on the "unrelated business income" (UBI) of charitable organizations (except churches); labor and agricultural organizations; chambers of commerce, business leagues, and real estate boards; certain trusts; and certain title holding companies.
IRS stated that it plans to issue technical guidance in the first quarter of 2007 that the agency believes will help ensure credit union compliance with UBIT