This topic will start off with a general understanding of what is unrelated business income. It will look deeply into how to tell if income streams are related or unrelated to the non-for-profits mission along with the other rules that could exempt the income from this category. We will also look at how to calculate the unrelated business income tax under the Tax Cuts and Jobs Act. The TCJA made it so non-for-profits can no longer aggregate their unrelated business income.

The TCJA also subjects certain expenses as unrelated business income. This is where the idea of Fake unrelated business comes in. Some non-for-profits may need to start treating certain expenses as income that is subject to tax. This is one area where the IRS could really get unsuspecting non-for-profits.

We will also look at ways to minimize the impact of the TCJA on non-for-profits. Finally, we will cover other changes for non-for-profits under the TCJA that each non-for-profit should be aware of.

The Tax Cuts and Jobs Act through the Non-for-Profit area on its head with how it changed both calculating what Unrelated Business Income Tax (UBIT) is, but also creating new categories of UBIT such as Fake Unrelated Business Income (FUBIT). If you deal with non-for-profits, you need to be aware of these changes or you could face IRS tax assessments and penalties. Most of these changes are very nuanced and many non-for-profits are not even aware of them, so it is very important to get on top of these.