{"id":278,"date":"2011-10-04T03:33:02","date_gmt":"2011-10-04T03:33:02","guid":{"rendered":"http:\/\/ua-cpas.com\/blog\/?p=278"},"modified":"2011-10-04T03:33:02","modified_gmt":"2011-10-04T03:33:02","slug":"non-profits-are-not-100-tax-exempt","status":"publish","type":"post","link":"https:\/\/www.ua-cpas.com\/blog\/index.php\/2011\/10\/04\/non-profits-are-not-100-tax-exempt\/","title":{"rendered":"Non-Profits are not 100% Tax-Exempt"},"content":{"rendered":"<p>Many people think that tax-exempt organizations don\u2019t pay federal income tax. While this assumption is true under most circumstances, there are times that they are indeed subject to income tax. When tax exempt organizations engage in commerce unrelated to their exempt status, Congress legislated that they are in fact required to pay their fair share in taxes. This is known as \u201cUnrelated Business Income Tax\u201d or UBIT for short.<!--more--><\/p>\n<p>To be subject to the UBIT rules, a tax exempt organization must:<\/p>\n<ul>\n<li>Carry on a trade or business usually involving the sale of goods or services in exchange for money or something of value for the purpose of making a profit<\/li>\n<li>\u00a0Regularly carry on the trade or business; it must take place frequently or on a continual basis similar to the way a for-profit business would be carried on<\/li>\n<li>Carry on a trade or business that is not substantially related to the organization\u2019s tax-exempt\u00a0 purpose<\/li>\n<\/ul>\n<p>There are several exceptions where unrelated and regularly carried on business activity will not be subject to UBIT including:<\/p>\n<ul>\n<li>The business is performed for the convenience of its members. For example, a non-profit hospital\u2019s cafeteria<\/li>\n<li>Work performed by unpaid volunteers<\/li>\n<li>\u00a0The sale of donated property<\/li>\n<li>Passive investments\u00a0 such as dividends, royalties, interest, and capital gains<\/li>\n<\/ul>\n<p>While the above information outlines the basic rules of UBIT, the surrounding laws are very complex and specific advice should be sought from competent tax counsel.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Non-Profit Organizations may have Taxable Income-UBIT<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16],"tags":[157],"class_list":{"0":"post-278","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-non-profits","7":"tag-non-profits","8":"entry"},"_links":{"self":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/278","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/comments?post=278"}],"version-history":[{"count":0,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/278\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/media?parent=278"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/categories?post=278"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/tags?post=278"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}