Unrelated Business Income (UBI)

Income from a trade or business that is not substantially related to a not-for-profit organization's tax-exempt function and that is regularly carried on by the organization. Annuities, interest, royalties, and rent from real and certain personal property are specifically excluded from the definition of unrelated business income. A corporate tax is imposed on UBI in excess of $1,000 in order to place the tax-exempt organization on an equal footing with taxable organizations with respect to their business operations.