What income is subject to Unrelated Business Income Tax (UBIT)?
Churches and religious organizations, may engage in income-producing activities unrelated to their tax-exempt purposes, as long as the unrelated activities are not a substantial part of the organization’s activities. However, the net income from such activities will be subject to UBIT if the following thru conditions are met: • the activity constitutes a trade or business, • the trade or business is regularly carried on, and • the trade or business is not substantially related to the organization’s exempt purpose. Even if an activity meets the above three criteria, the income may not be subject to tax if it meets one of the following exceptions: • substantially all of the work in operating the trade or business is performed by volunteers; • the activity is conducted by the organization primarily for the convenience of its members; or • the trade or business involves the selling of merchandise substantially all of which was donated. In general, rents from real property, royalties, capit
