By Keiter CPAs
By John E. Kent, Jr., CPA, Partner | Not-for-Profit team
Unrelated business taxable income is the gross income derived by any tax-exempt organization from any unrelated trade or business regularly carried on by the organization, less allowable deductions. An unrelated trade or business is any trade or business the conduct of which is not substantially related to the exercise or performance by the organization of its exempt purpose.
Under the old law, tax-exempt organizations that have more than one unrelated business or trade, were allowed to consolidate those revenues and expenses. The Tax Cuts and Jobs Act provides that exempt organizations with more than one trade or business will be required to compute their unrelated business income separately with respect to each trade or business. Net operating loss deductions after December 31, 2017, may only offset future unrelated business income with respect to the trade or business for which the loss arose. Prior year net operating losses will be allowed to be carried forward and will not be subject to the new rule.
Please contact our not-for-profit team with any questions you have regarding unrelated business income tax and the new rules. Email | 804.747.000
Additional not-for-profit accounting and tax resources:
- Earned Income Ventures: Starting a Social Enterprise
- Upcoming Changes to Not-for-Profit Reporting and Your Organization’s Chart of Accounts
- Officers, Directors, and Key Employees-Is your 990, Part Vii Complete?
- Not-for-Profit Blog
About the Author
Keiter CPAs
Driven by our core values of innovation, collaboration, relationships, and accountability, we serve as trusted Opportunity Advisors, providing tailored advice to help you make confident, forward-looking decisions.
Our comprehensive services include audit and assurance, tax, cybersecurity, risk advisory, valuation and forensic services, and transaction advisory services. We specialize in supporting entrepreneurs, private business owners, and organizations across industries such as financial services, construction, healthcare and medical services, real estate, manufacturing, retail & distribution, private equity and institutional investors, technology and nonprofits.
More Insights from Keiter CPAsThe information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.
