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, 1987

Front Cover
U.S. Government Printing Office, 1987 - 15 pages

From inside the book

Selected pages

Other editions - View all

Common terms and phrases

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.

Bibliographic information