Principles of Unrelated Business Income and Form 990-T Reporting Requirements

Author: Megan Ryan, Danielle Wright, Clark Nuber

Nonprofit organizations are generally recognized as exempt from federal income taxes, with the exception of tax on unrelated business income. This course is designed to assist those working for nonprofit organizations as well as CPAs and others who consult with nonprofits to identify unrelated business activities and gain confidence in calculating unrelated business taxable income. We will cover the three primary principles of unrelated business income as well as exceptions to those principles. We will also discuss common examples of unrelated business income, siloing rules, and Form 990-T reporting.

Publication Date: July 2022

Designed For
CPAs, CFOs, Controllers, Directors of Finance, Finance and Accounting Staff, bookkeepers, and others working with exempt organizations.

Topics Covered

• Overview of unrelated business income
• Criteria for Unrelated Business Income
• Separate Trade or Business Activities
• Rental Activities
• Advertising and Sponsorships
• Other Common Sources of UBI
• Form 990-T Reporting

Learning Objectives

• Recognize and apply the three principles of unrelated business income and apply those principles to activities commonly treated as unrelated
• Identify where exceptions or special rules exist to exclude an activity from unrelated business income
• Describe the siloing rules and the impact of those rules on Form 990-T reporting
• Recognize which rule laboratory testing for private physician clinics for non-hospitals and hospital pharmacy sales to non-patients are examples relates to
• Identify beginning on or after which date general rules were effective for tax years
• Describe the 2-digit code used to identify separate trade or business activities
• Identify the correct ratio for the amount subject to unrelated business income tax for debt-financed real property rentals
• Identify income related revenue from publication, such as subscriptions or sales (i.e., non-advertising revenue)
• Recognize which type of entities does not look through to activity of underlying business to determine the nature of revenue allocated to an exempt organization

Level
Intermediate

Instructional Method
Self-Study

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
Basic understanding of unrelated business income and Form 990-T Reporting Requirements.

Advance Preparation
None