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