Video: Criteria for Unrelated Business Income

In this lesson, Nick Palazzolo, CPA, clarifies the intricacies of Unrelated Business Income for tax-exempt organizations. He lays out the three criteria that must be met for income to be deemed unrelated business income, emphasizing the significance of the third point, which often catches entities by surprise. He reassures attendees by explaining that while some income types are exceptions to these rules, the main takeaway is understanding that engaging in regular business activities unrelated to a tax-exempt entity's purpose will likely result in tax obligations at the corporate rate. Nick wraps up by ensuring everyone knows how these rules play out in practical scenarios, with a focus on keeping tax-exempt status secure while meeting necessary tax commitments.