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Unrelated Business Income Tax (UBIT)

Generally, organizations exempt from income tax under section 501(a) of the tax code do not pay federal income tax on their excess support and revenue over expenses (e.g. profits). However, Internal Revenue Code (IRC) Section 511 does impose a tax on the revenue generating activities of the otherwise exempt entity that are unrelated to their exempt purpose. A common misconception of many nonprofits is that if the revenue generated from activities is used for exempt purposes… (read more)

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