UBTI and UBIT for Exempt Organizations: Mastering Form 990-T

Getting Calculations Right and Avoiding Audit Traps

Recording of a 110-minute CPE webinar with Q&A


Conducted on Thursday, June 7, 2018

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will give nonprofit tax professionals and advisers a good look at the rules governing unrelated business income tax (“UBIT”), which U.S.-based tax-exempt organizations must pay on UBTI. The webinar will focus on the standards and guidelines for determining whether income is UBTI and thus subject to tax, and will provide a detailed exploration into the calculations and preparation of Form 990-T, Exempt Organization Business Income Tax Return.

Description

A primary concern of tax-exempt organizations is navigating the rules on unrelated business taxable income (“UBTI”). Many exempt organizations receive taxable income and depend on that income to carry on their charitable purpose. The Tax Cuts and Jobs Act created a whole new category of UBTI based on the existence of certain expenses, which will add thousands of charities to the list of those with UBTI. However, UBTI generates the need to file an income tax return and can lead to an unexpected tax bill, and excess UBTI can jeopardize the exempt status of a nonprofit organization.

As the nature of nonprofit organizations evolves, and the distinction between exempt and for-profit organizations is less defined, tax advisers of nonprofit entities can expect the IRS to continue scrutiny of UBTI. Exempt organizations must carefully review their UBTI calculations to avoid having income or expenses reclassified as taxable by the IRS.

Through proper planning and reporting, exempt organizations may be able to anticipate and mitigate the impact of UBTI. Tax advisers need to know the specifics of tax return treatment of UBTI to assist nonprofit clients in complying with the UBTI regulations.

Listen as our panel of experienced nonprofit tax advisers provides a deep dive into the rules and reporting requirements governing UBTI for exempt organizations.

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Outline

  1. Unrelated business taxable income overview
  2. Form 990-T filing thresholds
  3. UBTI calculations and schedules
    1. Tax computation
    2. Allocation of expense deductions
    3. Rent income (Schedule C)
    4. Unrelated debt-financed income (Schedule E)
    5. Exploited activities (Schedule I)
    6. Advertising income (Schedule J)
    7. Other schedules
  4. IRS audit “triggers” leading to increases in UBTI

Benefits

The panel will discuss these and other relevant topics:

  • Definitions of UBTI and Form 990-T filing thresholds
  • Deductions standards for expenses in UBTI calculations
  • Rental income as UBTI
  • Affinity contracts
  • Advertising activities
  • Alternative investments
  • Unrelated debt-financed income
  • Newly taxable expenses from the Tax Cuts and Jobs Act

Faculty

Blunt, Brenda
Brenda A. Blunt, CPA, CGMA

Tax Partner
Eide Bailly

Ms. Blunt has nearly 30 years of experience providing services to tax-exempt entities, closely-held business and their...  |  Read More

Nelson, Deb
Deb D. Nelson, CPA

Partner
Eide Bailly

Ms. Nelson has over 13 years of specialized tax experience working with exempt organizations, including charities,...  |  Read More

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