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Non Exempt Purposes At A University Stand Point

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Looking more closely at a university stand-point, revenue produced from a non-exempt purpose is subject to potential taxation from the unrelated business income. With the formal definition in place, the following will provide a few specific examples of regular activities that universities participate in that may or may not qualify as unrelated business income: A.) University X, an exempt university, has racquet ball courts within a sporting facility along with dressing rooms that are available during the school year and are considered to be part of the universities educational programs. The university also allows the general public to use the facilities for a particular fee. With the facilities on campus, university employees maintain, …show more content…

Since, the organization made available its facilities and personnel to individuals not associated with the institution for the conduct of a summer camp, it is ruled to be engaged in the conduct of an unrelated business. C.) Suppose University Y, an exempt university, has an art museum that provides food from a café for the visitors of the museum. Since there is a place to sit and eat within the museum, the visitors are able to spend a greater amount of time viewing the museums educational exhibits and art collections. With this additional time, visitors are not interrupting their museum experience by traveling to outside eating facilities. With that, the café is a service that contributes importantly to the accomplishment of the exempt purposes and the income produced from the activity is neither an unrelated business income nor taxable. D.) A basketball arena that is located at the center of University Z, an exempt university, allows the general public to use the facility at specific times when neither the women’s nor men’s basketball team needs use of the arena. Moreover, University F also uses the basketball arena to host educational seminars and teach a recreational sports facility management course. Due to the fact that the arena is used in the exempt function of the university – for education purposes – the revenue is not unrelated business income and not taxable ("Unrelated Business Income Tax Detail”).
Filing and Taxation

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