Unrelated Business Income Tax (UBIT)
The University of Cincinnati is subject to a federal tax on "unrelated business income," that is, income from activities that are unrelated to our tax-exempt purposes of education, research and charitable public outreach.
The activities in question are those that produced the income, not those in which the money will be used. Conducting a taxable activity and using that income for scholarships, for example, does not render the income tax-exempt.
Unrelated business activities are generally those that constitute a profit-motivated "trade or business," are regularly carried on, and are not substantially related to our tax-exempt purposes.
Exceptions from UBIT
Certain types of income, and income from certain types of activities, are generally exceptions from UBIT. Exceptions include:
- Interest, dividends, capital gains and similar investment income
- Rental of real property
- Scientific research
- Corporate sponsorships, if properly structured
- Activities conducted substantially all by volunteers
- Activities conducted primarily for the convenience of UC students or employees
This list is not exhaustive. It is also important to note that each exception has its own set of rules that apply. Determinations on the taxability of any given activity are made by the Director, Tax Compliance.
UBIT General Questionnaire
We recently distributed a General Questionnaire to UC business managers, asking them to identify what types of revenue-generating activities they undertake, and where they record those revenues in our general ledger.
We are now reviewing those responses and will contact UC business managers for any necessary follow-up.
Please direct any questions to Ed Bower by e-mail or at 513-556-2524.