unrelated business income tax (ubit) september 4, 2013
TRANSCRIPT
UBI at - Agenda
UBI Certification UBI Questionnaire UBI Financial Statement template Reconciliation to General Ledger UBI Tax Rates Reminders
UBI Certification
Dean, Director, Department Chair signs
Complete one per Department/Center, to reflect all UBI activities
Original signature required – mail to Payroll and Tax Services (preferred)
Requires completion of UBI Questionnaire
UBI Questionnaire
Complete one for each UBI activity
Complete one even if you have no UBI activity – confirmation
Provide comments/explanations as needed
UBI Guidelines
UBI General Guidelines IRS Criteria (Publication 598 – Tax on
Unrelated Business Income of Exempt Organizations)
Unrelated Activity examples
Related Activity examples
Potential Exclusions
UBI Financial Statement Template
UBI Financial Statement Template Workbook includes multiple sheets Goals are to improve reconciliations to GL,
consistency in reporting, and time required for completion and review
Instructions sheet Financial Statement (populated primarily
by other sheets in the workbook) UBI% Worksheet – calculation of UBI %
used
UBI Financial Statement Template
UBI Financial Statement Template (cont.) Income – record amounts by GL account
and source (up to 7 sources) Cost of Goods Sold – record beginning
and ending inventories and FY purchases by GL account and source
Personnel Costs – record amounts by GL account and source for any accounts supporting the unrelated activity Costs for specific employees, if used, must
reconcile to a Payroll Cost Distribution report
UBI Financial Statement Template
UBI Financial Statement Template (cont.) Non-Personnel Expenses
Grouped by category Record by GL account and source Totals flow to the Financial Statement Summary
Depreciation Will be completed by Payroll and Tax Services Departments may be asked to verify
equipment/buildings used for UBI activities
UBI Financial Statement Template
UBI Financial Statement Template (cont.) GL Account Descriptions Resources/Links
Payroll and Tax Services website IRS Publication 598
UF Contact Information Additional worksheets provided for your
Supporting Schedules or Explanations
Reconciliation to the General Ledger
Documentary evidence of reconciliation from the PeopleSoft GL to the submitted UBI Financial Statement is required
Examples of source documents: Cash Summary Appropriations Summary Grant Projects Summary KK to GL Summary Cost Distribution Reports
Reminders
UBI is a complex topic with multiple criteria and possible exclusions, often requiring interpretation.
“Substance over form” - You may try to call income a qualified sponsorship, but if it has the characteristics of advertising, it likely is.
University Payroll & Tax Services is willing to help you determine if your activity might generate UBI.
IRS Focus Areas
Continue to monitor: Activities not “regularly carried on” Lack of profit/profit motive – activities
showing consistent losses for several years (UF is required to net these losses to zero until profit is made again.)
Dual-use Expense Allocations – need to recognize all funding sources and subsidies if you are calculating a UBI % to be applied to your expenses (IRS says that losses are being subsidized from somewhere!)