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Abstract: 

The Tax Cuts and Jobs Act (TCJA) added new IRC §512(a)(7). Under the new provision, an exempt organization’s unrelated business taxable income (UBTI) is increased by any amount for which a deduction is not allowable by reason of IRC §274, and that the organization paid or incurred for any qualified transportation fringe (as defined in IRC §132(f)), or for any parking facility used in connection with qualified parking (as defined in IRC §132(f)(2)(C)). New IRC §512(a)(7) is an important change to the law, and it will require many organizations that historically have not had UBIT liability to file Forms 990-T and pay tax. To minimize their tax liability, organizations should seek to minimize their parking expenses and, to the extent possible, limit their provision of reserved employee parking. In addition to explaining the new provisions, we examine how to take advantage of the Owned-or-Leased Parking Safe Harbor provisions of the law.

Keywords: Disallowed Deductions; Qualified Transportation Fringe; of IRC §274(a); Notice 2018-99; Parking Safe Harbor; Forms 990-T

Affiliations:  1: Family Foundation Advisor.