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Unrelated
Business Income
The University
is tax-exempt as an instrumentality of the State of Georgia
under
Section 115 of Internal Revenue
Code
and is exempt from federal income tax when engaging in activities
which further the instruction, research and public service
mission of the institution. However, the University is not
exempt from income tax imposed on activities which are substantially
unrelated to those exempt purposes, even though these activities
may generate income to support the University’s purpose
and mission related activities.
As defined by the Internal Revenue Service, an activity will
have unrelated business income and be subject to unrelated
business income tax if it meets three requirements:
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1. |
A
trade or business – any activity carried on for
the production of income from selling goods or performing
services; |
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2.
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Is
the activity regularly carried on – any activity
that shows a frequency and continuity and is pursued
in a manner similar to comparable commercial activities
of nonexempt organizations; and |
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3. |
Is
the activity unrelated to the University’s
exempt purpose – the activity does not contribute
importantly to accomplishing the University’s exempt
purpose. |
However, there are exceptions to these requirements and in
some situations, determination of whether or not the activity
generates unrelated business income will be case specific.
If you have specific questions about unrelated business income,
please contact the Accounting Department at (706)542-1197
and speak with either Celise Elder or Allison Davis.
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