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Life Cycle of a Private Foundation - Unrelated Business Income Tax

Even though an organization is recognized as tax exempt, it still may be liable for tax on its unrelated business income.  Unrelated business income is income from a trade or business, regularly carried on, that is not substantially related to the charitable, educational, or other purpose that is the basis of the organization's exemption.  An exempt organization that has $1,000 or more of gross income from an unrelated business must file Form 990-T.  See Unrelated Business Income Tax Returns and the Form 990-T instructions for more information about return filing.

The obligation to file Form 990-T is in addition to the obligation to file Form 990-N (the e-postcard) or the annual information return, Form 990, 990-EZ or 990-PF.  Group or consolidated returns are generally not permitted.  Title holding corporations and organizations receiving their earnings may file a consolidated return, however.

Additional Information

Unrelated Business Income - online training available at StayExempt.irs.gov


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Page Last Reviewed or Updated: 18-Feb-2014