What is UBI, and why might a nonprofit need to know about UBI?
UBI is income from a regularly-carried-on trade or business that is not substantially related to the organization’s exempt purpose.
To generate UBI, the activity must be:
- A trade or business,
- Regularly carried on, and
- Not substantially related to the organization’s exempt purpose.
These three requirements form the three facets of the UBI test. To be considered a source of unrelated business taxable income, an activity must conform to each of the three facets. Trade or business…
Here is an IRS course to learn more about UBI: https://www.stayexempt.irs.gov/home/existing-organizations/unrelated-business-income