As a result, the tax-exempt organization
may need to reasonably approximate UBTI by state.
In many jurisdictions, a limited liability company (but only those treated as a corporation for federal tax purposes), a trust, or a trust created by will can create a tax-exempt organization
However, regardless of the type, joint ventures between tax-exempt organizations
and for-profit entities are highly scrutinized by the IRS because of the concern that such ventures will not contribute to one or more of the exempt organization's purposes.
This proposal would implement changes in federal tax laws to provide a guide for tax-exempt organizations
which are required to make applications for tax-exemption and annual information return available for public inspection.
The IRS, in Private Letter Rating 9043039, issued July 30, 1990, appears to have wavered on this position by concluding that the Subpart F income inclusion of a tax-exempt entity resulting from its ownership of a foreign captive insurance company must be characterized by the income that makes up the inclusion, thereby treating the Subpart F income inclusion as if it had been earned directly by the tax-exempt organization
for UBT1 purposes.
The new Form 990 requirements generated a significant amount of discussion and debate among the IRS, tax-exempt organizations
and members of the client-serving community Accounting authorities such as the AICPA have increased their involvement in these discussions to try to address the concerns of taxpayers and their preparers.
The question remains whether all of the tax-exempt organizations
that have not filed are actually out of business.
with gross receipts of $25,000 or less were previously not required to submit information returns.
The issue was whether the Subpart F income generated by the captive constituted "unrelated business taxable income" which would be taxable to the tax-exempt organization
notwithstanding its exemption.
The Pension Protection Act of 2006 introduced a new notification requirement for small tax-exempt organizations
that are not required to file an annual information return under IRC [section] 6033(a)(1).
In addition, we will suggest that the IRS address whether or not each joint venture described would generate unrelated business income to the tax-exempt organization
In evaluating whether a tax-exempt organization
has received a substantial return benefit, all benefits other than the sponsor acknowledgment must be taken into account.