UNRELATED BUSINESS
INCOME TAX (UBIT)
SEPTEMBER 4, 2014
UBI at
- Agenda
UBI Certification
 UBI Questionnaire
 UBI Financial Statement template
 Reconciliation to General Ledger
 UBI Tax Rates
 IRS Focus and Reminders

UBI Certification
UBI Certification




Dean, Director, Department Chair signs
Complete one per Department/Center, to
reflect all UBI activities
Original signature – mail to Payroll and Tax
Services (preferred)
Requires completion of UBI Questionnaire
UBI Certification
UBI Questionnaire
UBI Questionnaire



Complete one for each activity
Complete one even if you have no UBI
activity – your confirmation
Provide any comments/explanations as
needed
UBI Questionnaire
UBI Guidelines
UBI Guidelines

UBI General Guidelines
 IRS
Criteria (Publication 598 – Tax on
Unrelated Business Income of Exempt
Organizations)
 Unrelated
 Related
Activity examples
Activity examples
 Potential
Exclusions
UBI Guidelines - Examples
UBI Guidelines - Exclusions
UBI Financial Statement Template
UBI Financial Statement Template

UBI Financial Statement Template
 Workbook
includes multiple sheets
 Improved
reconciliations to GL
 Consistency in reporting by units
 Easier completion and review
 Instructions
sheet
 Financial Statement (populated primarily by
other sheets in the workbook)
 UBI% Worksheet – calculation of UBI % used
UBI Financial Statement Template
UBI Financial Statement Template
UBI Financial Statement Template

UBI Financial Statement Template (cont.)
 Income
– record amounts by GL account
and source (up to 7 sources)
 Cost of Goods Sold – record beginning and
ending inventories and FY purchases by GL
account and source
 Personnel Costs – record amounts by GL
account and source for any accounts
supporting the unrelated activity
 Costs
for specific employees, if used, must
reconcile to a Payroll Cost Distribution report
UBI Financial Statement Template Income
UBI Financial Statement Template Personnel
UBI Financial Statement Template

UBI Financial Statement Template (cont.)
 Non-Personnel
Expenses
 Grouped
by category
 Record by GL account and source
 Totals flow to the Financial Statement Summary
 Depreciation
 Will
be completed by Payroll and Tax Services
 Departments may be asked to verify
equipment/buildings used for UBI activities
UBI Financial Statement Template –
Non-Personnel Expenses
UBI Financial Statement Template

UBI Financial Statement Template (cont.)
 GL
Account Descriptions
 Resources/Links
 Payroll
and Tax Services website
 IRS Publication 598
 UF
Contact Information
 Additional worksheets provided for your
Supporting Schedules or Explanations
UBI Financial Statement Template –
GL Accounts, Resources and Contacts
Reconciliation to the General Ledger
Reconciliation to the General Ledger


Documentary evidence of reconciliation
from the PeopleSoft GL to the submitted
UBI Financial Statement is required
Examples of source documents:
 Cash
Summary
 Appropriations Summary
 Grant Projects Summary
 KK to GL Summary
 Cost Distribution Reports
UBI Tax Rates

Federal:

Florida: 5.5% Corporate Income Tax Rate
IRS Focus Areas

Continue to monitor:
 Activities
not “regularly carried on”
 Lack of profit/profit motive – activities
showing consistent losses (UF is required to net
these losses to zero until profit is made again.)
 Dual-use Expense Allocations – need to
recognize all funding sources and subsidies if
you are calculating a UBI % to be applied to
your expenses (IRS says the losses are being
subsidized from somewhere!)
Reminders



UBI is complex with multiple criteria and
exclusions, often requiring interpretation
and a case-by-case analysis.
“Substance over form” - You may try to
call income a qualified sponsorship, but if it
has the characteristics of advertising, the
IRS will likely conclude that it is.
University Payroll & Tax Services is willing to
help you determine if an activity might
generate UBI.
Due Date
Certifications, Financial Statements, and
Supporting Schedules are due:
Thursday, October 9, 2014
(for FY2013-2014)
Questions, comments or requests for a
departmental UBI visit, contact:
University Payroll and Tax Services
(352) 392-1231
CPE
Remember to sign-in today
and complete an evaluation form
to receive your CPE credit.
Download

Unrelated Busines Income Training, 2013, Part 2