02/21/2018

UBI Will Now Be Separately Computed for Each Business Activity

What ASAE knows and what it expects to learn

The American Society of Association Executives (ASAE) continues to assess the impact of the Tax Cuts and Jobs Act (TCJA) on tax-exempt organizations. As such, the organization has shared the following article prepared for ASAE and its members by Deborah Kosnett, CPA, Tax Principal, and Lisa Heller, CPA, Tax Senior Manager, both of Tate & Tryon CPAs.

The article provides an excellent overview of the provision in the tax law requiring that unrelated business taxable income (UBTI) be separately computed for each business activity, ostensibly to prevent tax-exempt groups from using the loss from one unrelated business activity to offset the income from another unrelated business activity. The PDF article can be found here.

This is a complex issue, and ASAE is still awaiting guidance from the Internal Revenue Service (IRS) to see how the agency interprets the provision. That said, the Tate & Tryon article provides some helpful recommendations for exempt organizations seeking to plan ahead for this provision.  If you have questions about this issue, feel free to contact the authors directly (their email addresses are in the article) or ASAE’s Public Policy team at publicpolicy@asaecenter.org.