Charities, Life Insurance, and the Unrelated Business Income Tax
Author: Mary Ann Mancini.; Bryan Cave LLP.; Jerry J. McCoy.
Source: Volume 08, Number 01, November/December 2008 , pp.3-4(2)
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Abstract:
Qualified charities are exempt from tax on most types of income. A significant exception to this general rule arises under the tax imposed on unrelated business taxable income (UBTI) under §§511 through 515.1 Under the tax on UBTI, an organization that is otherwise exempt from tax must nevertheless pay tax at regular rates on income realized from a business that is (1) regularly carried on and (2) unrelated to the organization’s taxexempt purpose. In addition, as discussed below, income that is debt-financed is automatically categorized (and taxed) as UBTI.Keywords:
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