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Unrelated Business Taxable Income (UBTI)
Practical Law Glossary Item w-014-6278 (Approx. 3 pages)
Glossary
Unrelated Business Taxable Income (UBTI)
Also known as unrelated business income. Generally, an exempt organization's income from an activity that is:
- A trade or business.
- Regularly carried on.
- Not substantially related to the charitable, educational, or other purpose that is the basis of the organization's tax-exempt status.
Even if an organization is exempt from federal income tax, it may be liable for tax on its UBTI. Certain income, such as dividends, interest, and certain other investment income, royalties, certain rental income, certain income from research activities, and gains or losses from the disposition of property are excluded from the calculation of UBTI.