20.60 - Unrelated Business Income (Tax)

July 21, 2009 (formerly APM 10.60)

A. General. University departments or units may find some revenue producing activities which they undertake might be classified as unrelated business income by the Internal Revenue Service (IRS).

B. Definition of Unrelated Business Income. Unrelated business income is defined as income derived from a business activity that is regularly carried on, that is not substantially related to the university’s exempt purpose, and is not covered by specific IRS exemptions.

B-1. Financial Implications. Net revenue derived from unrelated business activities is subject to income tax at corporate tax rates. The University is required to file an annual tax return to report all unrelated business income and pay any unrelated business income tax (UBIT) due. Departments or units generating taxable revenue are responsible for the payment of any tax due.

C. Process. Departments or units establishing income producing activities are required to complete a questionnaire provided by Business Systems and Accounting Services (BSAS). This questionnaire is used to make a determination as to the status of income derived from each activity. Questions regarding unrelated business income should be directed to the Director of BSAS, (208) 885-6530. [ed. 7-10]