Things That Annoy Me, Part 3 – UBI

UBI stands for “unrelated business income,” a concept unknown to the natural world but one that has infected the Internal Revenue Code (§ 513) for a long time. (UBIT stands for unrelated business income tax.) Basically, § 513 means that nonprofit organizations (operating nonprofits, foundations, endowments, IRAs) can’t engage in business operations or they will have to pay taxes on any revenues they generate. If they engage in too much business activity, they can lose their exempt status. An obvious example would be many of the items sold in museum gift shops. read more »

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