Video: Characteristics of Unrelated Business Income

In this lesson, Nick Palazzolo, CPA, takes a deep dive into the terrain of Unrelated Business Income (UBI) for tax-exempt organizations. He starts by clarifying what constitutes UBI, emphasizing activities that are not substantially related to an organization's exempt purpose. Nick illustrates his points with relatable examples, such as animal shelters conducting sales or universities selling ad space, making it clear when these activities might cross into taxable territory. He simplifies the IRS regulations, breaking down when and why tax-exempt organizations must file separate income tax on UBI and what happens when income exceeds certain thresholds. Additionally, Nick makes sure to differentiate situations where income from investments might be considered UBI, ensuring a thorough understanding of when tax exemptions apply and when they don't.