Unrelated Business Income

One of the more scrutinized areas by the Internal Revenue Service in the exempt organization sector involves the reporting of unrelated business income by an exempt organization. A study conducted by the Internal Revenue Service concluded that too many exempt organizations are significantly under-reporting their unrelated business income tax liabilities. That being so, in recent years, the IRS has significantly increased their focus and attention on identifying those situations where an exempt organization’s UBIT liability is potentially lower than it should be.

In the unrelated business income area, we provide the following value-added services to our nonprofit clients:

  • Undertaking of extensive unrelated business income studies whereby we analyze all of the exempt organization’s revenue streams and determine whether such would be considered unrelated business income or not.
  • Preparing of memoranda addressing various unrelated business income issues, such as the many available exceptions and exclusions, the allocation of expenses against an organization’s gross unrelated business income, UBI substantiality issues and state UBI issues.
  • Preparing of federal and state unrelated business income tax projections.
  • Calculating state reportable unrelated business income liabilities.