Is the income earned by a thrift or book store subject to unrelated business income tax?
(1) From Allen R. Bromberger, Esq. The real issue is whether the business activity contributes to the accomplishment of your tax-exempt purpose in some “important” or “significant” way other than through the production of income. If it does, the income is “related” and not subject to UBIT. If it doesn’t, the income is “unrelated” and may be subject to UBIT. For example, if the people who work in your stores are themselves former addicts or prisoners who are using their jobs at the store to rebuild their lives, in my view that would make the income “related” and therefore not subject to UBIT. Ditto if you are making goods available at reduced prices to former addicts or prisoners so that they can rebuild their lives. But if the businesses themselves are not run in such a way as to advance your mission in an important or significant way, but merely produce income (and perhaps visibility) for your cause, that is probably not sufficient to make it “related” business income. If the business
