Awar
ds Management Process
Unrelated Business Income Tax
UBIT (Unrelated Business Income Tax) is a tax imposed on the unrelated income generated by tax-exempt organizations. OHIO is an institution with a teaching and research mission, exempt from taxation. However, the university is required to p
ay Federal Income Tax on net income from generated activities that are not related to teaching and/or research.
Unrelated Business Income consists of income generated by the university from activities that are not related to the exempt mission of the university. Income is considered to be unrelated if all of the conditions listed below are met:
• The activity is conducted as a trade or business;
• The activity is regularly carried out, and;
• The activity is not substantially related to the exempt mission of the university.
Income generated from the following activities is not subject to UBIT, even if all three of the above criteria have been met:
• Activities conducted for the convenience of the students, faculty and staff
• Rental Income (applies to real estate only)
• Exclusion may be lost if services are provided
• Exclusion may be lost if personal property is included
• Capital gains transactions
• Interest and dividends
• Royalty income
• Distribution of low-cost research
• Research activities
• Activity must constitute research
• If activity is for “routine testing” with no value, exception does not apply
The tax asses
sed is meant to level the playing field between taxable entities, such as for-profit companies and not-for-profit entities that are untaxed.
OHIO does not accept contracts or agreements with the term “work for hire” as this subjects us to unrelated business income tax. “Work for hire” is not part of the mission of Ohio University and is therefore taxable.
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