June 25, 2020
NAICU Joins Community Comments on UBIT “Basketing”
NAICU signed on to comments drafted by the National Association of College and University Business Officers (NACUBO) to the Internal Revenue Service (IRS) in response to proposed IRS rules issued in April. The proposed rules adopt changes to how unrelated business income (UBI) is reported to the IRS.
The comments include suggestions on classifying activities, allocating expenses, and reporting investments.
The 2017 Tax Cuts and Jobs Act (TCJA) changed the way tax exempt organizations, including colleges and universities, report income unrelated to their charitable/educational purpose. Instead of reporting a sum total of all UBI to the IRS, institutions must now report each category separately – in separate “baskets.” This prevents colleges and universities from offsetting the UBI of one trade or business with the loss of another, increasing the institution’s tax burden.
It’s unclear when the IRS will issue a final rule.
The comments include suggestions on classifying activities, allocating expenses, and reporting investments.
The 2017 Tax Cuts and Jobs Act (TCJA) changed the way tax exempt organizations, including colleges and universities, report income unrelated to their charitable/educational purpose. Instead of reporting a sum total of all UBI to the IRS, institutions must now report each category separately – in separate “baskets.” This prevents colleges and universities from offsetting the UBI of one trade or business with the loss of another, increasing the institution’s tax burden.
It’s unclear when the IRS will issue a final rule.