Question: What are “directly connected” expenses? Answer: Deductions incurred solely because of the unrelated business are known as directly connected expenses. These are expenses that wouldn’t be incurred if the unrelated business didn’t exist. For example, the costs of maintaining a building that’s used solely for a gift shop (the unrelated business) could be a directly… [Read More]
What are “directly connected” expenses?
May 28, 2014 by Benjamin Stolz, Esq.
Filed Under: Form 990, Nonprofit Organizations, UBIT/ Unrelated Business Income Tagged With: directly connected, IRS, UBIT, unrelated activity
When is Unrelated Business Income Taxable?
May 28, 2014 by Benjamin Stolz, Esq.
If your nonprofit engages in inactivity unrelated to its exempt purpose, you may have Unrelated Business Income that is taxable. Unrelated Business Income is the income from a trade or business regularly conducted by an exempt organization and not substantially related to the performance by the organization of its exempt purpose or function, except that… [Read More]
Filed Under: Nonprofit Organizations, UBIT/ Unrelated Business Income Tagged With: 501(c)(3), exempt purpose, IRS, nonprofit, UBIT, unrelated business income, unrelated business income tax
What are “dual use” expenses?
May 28, 2014 by Benjamin Stolz, Esq.
Question: What are “dual use” expenses? Answer: If an expense is incurred both to carry on exempt functions of your nonprofit and to conduct an unrelated business, then you have what is known as a dual use expense. For example, let’s assume your nonprofit’s president is paid $80,000 per year. If he devotes 90% of his… [Read More]
Filed Under: Form 990, Nonprofit Organizations, UBIT/ Unrelated Business Income Tagged With: dual use expense, IRS form 990, UBIT, unrelated business