Kutchins, Robbins & Diamond, Ltd. Certified Public Accountants and Advisors

Unrelated Business Income Tax (UBIT)

Unrelated business income tax or UBIT is a corporate rate tax imposed on the unrelated business income generated by tax-exempt organizations. 

Non-profits and other tax-exempt organizations in Illinois can benefit from federal and state tax exemptions related to the organization’s charitable, educational or other mission. In order for organizations to benefit from these exemptions, they must be compliant with state and federal tax laws in order to avoid penalties and keep their tax-exempt status. 

In order for activity to be labeled as “unrelated business” it meets the following requirements:

  1. The activity is a trade or business, 
  2. The activity is frequent and consistent, and
  3. The activity is not substantially related to the exempt purpose of the organization 
  • To determine whether the activity is related, you must determine the size and extend of the activities involved. In addition, you must also determine the nature and extent of the exempt function that the activity intends to serve.   
  • To determine whether the activity is related, you must determine the size and extend of the activities involved; and the nature and extent of the exempt function that the activity intends to serve.   

We have helped numerous organizations and individuals with UBIT tax filing. KRD’s tax professionals can help you determine: 

  • Filing requirements for Form 990 and supporting schedules and forms 
  • Your organization’s amount of UBIT
  • Whether certain aspects of your organization are subject to UBIT
  • Allowable deductions in your UBIT calculations 

Contact KRD for Your Initial Consultation

KRD has extensive experience in the non-profit sector and understands the issues organizations and individuals typically face.  Fill out our contact form or call 847-240-1040 to schedule your free initial consultation. 

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