Accounting

Effective Date: 07/01/00

Policy Statement 8: Unrelated Business Income


General

The University is required to file an Exempt Organization Business Income Tax Return (Form 990-T) with the Internal Revenue Service reporting any unrelated business income generated by its activities. The Internal Revenue Code states that a university is generally deemed to have unrelated business taxable income when it realizes gross income of $1,000 or more from any regularly conducted trade or business that is not substantially related to its exempt purposes.


Definitions

A "trade or business" is an activity carried on for the production of selling goods or performing services. A specific business activity will be considered to be regularly carried on if it is conducted with a frequency and manner comparable to that of the same or similar activity by a taxable organization. "Not substantially related" means the activity that produces the income does not contribute importantly to the exempt purposes of the University.


Review

Each year the Comptroller's Office reviews all areas where unrelated business income may have existed in the preceding year. All departments are asked to notify the Comptroller's Office of any new programs that may generate revenues that fit the definition of unrelated business income. Any questions should be directed to the Comptroller.


Tax Liability

The presence of these activities does not mean that a tax liability exists. It may be determined that the activity is not subject to unrelated business income tax, or if it is a taxable activity, the revenue may generally be offset by the expense incurred.