CHAPTER 21

Unrelated Business Income

§ 21.1 IRS Scrutiny of Unrelated Business Income

§ 21.5 What Is Unrelated Business Income?

*(b) Commerciality Test

§ 21.8 Unrelated Activities

*(b) Services

§ 21.10 Income Modifications

(c) Rentals

§ 21.12 Debt-Financed Property

(a) Properties Not Subject to Debt-Financed Rules

§ 21.15 Publishing

(c) Circulation Income

§ 21.1 IRS Scrutiny of Unrelated Business Income

p. 624. Add at end of section:

The IRS 2012 Annual Report and FY 2013 Work Plan indicated they will continue exams for organizations that report unrelated business income and fail to file Form 990-T. Also the IRS will be analyzing Form 990-T data to develop risk models that will help the Division identify organizations that report “significant gross receipts” from unrelated business activities but do not declare any tax due. This effort will be used in connection with a “coming UBIT project.”1

§ 21.5 What Is Unrelated Business Income?

(b) Commerciality Test

*p. 629. Add at end of first partial paragraph:

In a complex non-tax case involving a violation of the Pension Benefit Guaranty Corporation (PBGC) standards, a private equity fund was found to be conducting a business2 owned by an employer pension plan that acquired controlling interests in struggling companies. It became involved in restructuring and operational plans and in building management teams, and otherwise involved itself in operating the companies. The fund did not sell goods or perform services, but instead sought ...

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