Welcome to EO Radio Show, your go-to resource for nonprofit legal information. I’m Cynthia Rowland, and in this episode, we continue our discussion on unrelated business income, specifically for 501(c)(3) organizations. While these organizations usually don’t pay income tax, not all income they generate is tax-exempt.
Unrelated business income is money earned from a trade or business that isn’t tied to the organization’s main charitable purpose. This income must be regularly generated to fit this definition.
In the previous episode, we explored key terms and provided helpful examples. Today, we’ll look at modifications to unrelated business taxable income. These modifications can exclude certain income types from being taxed, especially those that are considered passive income.
In our next episode, we’ll discuss the exceptions to these exemptions, particularly income from debt-financed activities, which is subject to taxation.
If you want to dive deeper, you can find detailed notes at our website: www.fbm.com/exempt-organizations/publications/nonprofit-basics-unrelated-business-income-tax-modifications-and-exceptions-part-2.
Have a topic in mind that you’d like us to cover? Just email us at eoradioshow@fbm.com. You can catch up on all our episodes at EORadioShowByFarella.com.
Remember, this podcast is for general information only and should not be taken as legal advice.
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