Journal article
John F. McArdle, Douglas G. Chene
Journal of Taxation, vol. 127(6), 2017, pp. 256-265
Journal of Taxation, vol. 127(6), 2017, pp. 256-265
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APA
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McArdle, J. F., & Chene, D. G. (2017). Entrepreneurial Activity of Small Colleges and Universities: UBIT Liability Issues. Journal of Taxation, 127(6), 256–265.
Chicago/Turabian
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McArdle, John F., and Douglas G. Chene. “Entrepreneurial Activity of Small Colleges and Universities: UBIT Liability Issues.” Journal of Taxation 127, no. 6 (2017): 256–265.
MLA
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McArdle, John F., and Douglas G. Chene. “Entrepreneurial Activity of Small Colleges and Universities: UBIT Liability Issues.” Journal of Taxation, vol. 127, no. 6, 2017, pp. 256–65.
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@article{john2017a,
title = {Entrepreneurial Activity of Small Colleges and Universities: UBIT Liability Issues},
year = {2017},
issue = {6},
journal = {Journal of Taxation},
pages = {256-265},
volume = {127},
author = {McArdle, John F. and Chene, Douglas G.}
}
Abstract:
Higher education institutions are facing increasing scrutiny from the federal government regarding their unrelated business activities. The IRS's Unrelated Business Income Tax (UBIT) applies to non-exempt activities of tax-exempt institutions, which has become particularly significant with the commercialization of research and for-profit ventures at universities. While large institutions often have the resources to manage these complexities, smaller colleges face unique challenges. These include limited tax expertise, budget constraints, and increasing pressure to generate revenue through commercial activities to remain viable.
Higher education institutions are facing increasing scrutiny from the federal government regarding their unrelated business activities. The IRS's Unrelated Business Income Tax (UBIT) applies to non-exempt activities of tax-exempt institutions, which has become particularly significant with the commercialization of research and for-profit ventures at universities. While large institutions often have the resources to manage these complexities, smaller colleges face unique challenges. These include limited tax expertise, budget constraints, and increasing pressure to generate revenue through commercial activities to remain viable.
This paper examines the potential threats UBIT poses to smaller colleges, explores the risks of interlocking boards between institutions and their for-profit subsidiaries, and offers recommendations on how institutions can structure such ventures to minimize exposure.