September 2018
The IRS and Treasury Department recently released new guidance for calculating the tax on unrelated business income (“UBI”) activities of tax-exempt organizations with more than one UBI activity. With the passage of the 2017 Tax Cuts and Jobs Act (the “Tax Act”), exempt organizations are required to calculate UBI tax separately for each UBI activity for taxable years beginning after December 31, 2017. Under prior law, exempt organizations could use the losses from one UBI activity to offset income from another.

The new guidance is found in Notice 2018-67 (the “Notice”) and provides that exempt organizations may rely on a “reasonable, good-faith interpretation” of the UBI sections of the Internal Revenue Code in determining whether they have more than one UBI activity. The Notice also guides tax-exempt organizations through calculating the tax on UBI activities for certain nontaxable fringe benefits, such as parking provided to their employees. Besides providing guidance, The Notice also requests comments through December 3, 2018 from the public regarding forthcoming proposed regulations on the matter.

View the full alert here.