The Internal Revenue Service doesn’t think about the receipt of assets from a closely related tax-exempt organization to be unrelated enterprise revenue. In most instances, revenue will not be thought-about unrelated enterprise earnings if the group perform the activity with out the intent or expectation of creating a revenue on the exercise. Under Internal Revenue Code part 514, property held for the manufacturing of income and topic to acquisition or enchancment indebtedness will typically produce unrelated business income. If a nonprofit organization licenses its intangible property and promotes an out of doors entity’s enterprise, the revenue may be unrelated business income. On the other hand, if the nonprofit organization licenses its intangible property and performs no other companies associated to the licensing, then the income is contemplate passive earnings and it’s sometimes not unrelated business income. If a nonprofit group sells commercials either in print or on the group’s website, the revenue is often unrelated enterprise income if the ads promote the advertiser’s enterprise and never the nonprofit organization. On the other hand, if the business’ name is solely talked about in a non-commercial manner and accommodates a message of support for the nonprofit organization, then it’s likely thought of to sponsorship earnings and never unrelated enterprise revenue.
This exception applies only where the payments to the person aren’t the proceeds of a sale or trade of the property transferred. Real property isn’t debt-financed property whether it is leased to a medical clinic and the lease is entered into primarily … Read More