Overview of the Unrelated Business Income Tax on Exempt Organizations: Scheduled for Hearings Before the Subcommittee on Oversight of the House Committee on Ways and Means on June 22, 25, 26, 29, and 30, 1987U.S. Government Printing Office, 1987 - 15 pages |
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Common terms and phrases
acquisition indebtedness activities of exempt American Bar Endowment apply to income basis business activities business income tax business taxable income categories of exempt charitable organizations churches Code Comm'r commercially sponsored Cong Congress constitutes a trade Court deductions derived from debt-financed Disabled American Veterans employee beneficiary associations example Excluded exempt function income exempt status extent for-profit businesses fragmentation rule ganizations gross income derived income earned income-producing activities insurance activities Internal Revenue Service investment income JUNE 20 labor or agricultural nization operated orga organization may qualify organization sec present-law rules qualify for tax-exempt regularly carried regulations provide rent attributable section 514 social welfare organizations substantially related supra tax applies Tax Reform Act tax treatment tax-exempt status tax-free taxable businesses tivities trade associations trade or business Treas UBIT applies UBIT liability unfair competition unrelated business income unrelated business taxable unrelated trade VEBA voluntary employee beneficiary
Popular passages
Page 6 - ... trade or business, (2) such trade or business is regularly carried on by the organization, and (3) the conduct of such trade or business is not substantially related (other than through the production of funds) to the organization's performance of its exempt functions.
Page 6 - Trade or business. The primary objective of adoption of the unrelated business income tax was to eliminate a source of unfair competition by placing the unrelated business activities of certain exempt organizations upon the same tax basis as the nonexempt business endeavors with which they compete. In general, any activity of a section 511 organization which is carried on for the production of income and which otherwise possesses the characteristics required to constitute "trade or business...
Page 8 - Where income producing activities are of a kind normally undertaken by nonexempt commercial organizations only on a seasonal basis, the conduct of such activities by an exempt organization during a significant portion of the season ordinarily constitutes the regular conduct of trade or business.
Page 7 - Hence, for example, specific business activities of an exempt organization will ordinarily be deemed to be "regularly carried on" if they manifest a frequency and continuity, and are pursued in a manner generally similar to comparable commercial activities of nonexempt organizations.
Page 9 - ... which substantially all the work In carrying on such trade or business is performed for the organization without compensation; or (2) Which is carried on.
Page 9 - ... or (3) Which is the selling of merchandise, substantially all of which has been received by the organization as gifts or contributions. (b) Special rule for trusts. The term "unrelated trade or business...
Page 6 - For purposes of this section, the term "trade or business" includes any activity which is carried on for the production of income from the sale of goods or the performance of services.
Page 6 - An organization may meet the requirements of section 501 (c) (3) although it operates a trade or business as a substantial part of its activities, if the operation of such trade or business is in furtherance of the organization's exempt purpose or purposes and if the organization is not organized or operated for the primary purpose of carrying on an unrelated trade or business, as defined in section 513.
Page 3 - The problem at which the tax on unrelated business income is directed here is primarily that of unfair competition. The taxfree status of . .. . organizations enables them to use their profits tax-free to expand operations, while their competitors can expand only with the profits remaining after taxes. Also...
Page 8 - ... functions, the gross income attributable to that portion of the activities in excess of the needs of exempt functions constitutes gross income from the conduct of unrelated trade or business.