Stocks Bought on Margin Produce Unrelated Business Income
Author: Staff Editors.
Source: Volume 08, Number 06, September/October 2009 , pp.5-5(1)
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Abstract:
A recent case demonstrates how the unrelated business income tax (UBIT) may be encountered unexpectedly by the charity or other exempt organization that purchases securities on margin. The U.S. Court of Federal Claims held in The Henry E. and Nancy Horton Bartels Trust for the Benefit of Cornell University v. United States (Case No. 03-2526T, 6/30/09) that securities purchased on margin for a trust established on behalf of a university were debt-financed property, and that the income derived from the sale of the securities was debt-financed income subject to UBIT.Keywords:
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