Search

Unintended consequences: Is your nonprofit “profitable”?

Many believe that their nonprofit’s 501(c)(3) tax-exempt status automatically and perpetually renders their organization’s activity tax-exempt. However, this is not necessarily true. Certain tax-exempt organizations are liable for tax if they have what is referred to as unrelated business taxable income (UBTI).

UBTI for a 501(c)(3) organization generally refers to any income earned by the organization that is UNRELATED to its tax-exempt purpose. This seems like an easy determination, right? Not so fast. Generating income to support the tax-exempt purpose of the organization is not enough in and of itself to show a relationship to its purpose! There is no set threshold that makes this determination; it is highly organization-specific. This is where it can get tricky. However tricky it may be, it is VERY IMPORTANT. Why?

Even though a 501(c)(3) is generally not taxed on its income, UBTI of a 501(c)(3) IS subject to tax. More importantly, if a 501(c)(3) has too much unrelated business activity, it may lose its 501(c)(3) status!!

Strict compliance with various laws and regulations is essential to maintaining 501(c)(3) tax-exempt status. Do not jeopardize the great work that you do! Contact C&G today to assist you!

P: (248) 395-3699 E: attyinfo@cg-legal-solutions.com

*Please be sure to read the disclaimer section on our site!!

Recent Posts

See All

Following the playbook..

Have you recently started a nonprofit? Have you been asked to sit on a board? Well, you need to be sure to “follow the playbook”! Check out GLLG’s Tip of the week HERE !

Are you part of the 44%?

According to a 2016 Gallup Poll taken after superstar Prince died, only 44% of Americans reported having a will. News outlets widely reported on the probate proceedings for his estate. One of the most

Weed Woes…?

Last week, Detroiters voted to pass two ordinances that lessen the restrictions on medical marijuana dispensaries in the City. The vote comes well over a year after City Council passed a largely restr

Corktown Office | 2020 14th Street, Suite 101, Detroit, MI 48216

admin@gllegalgroup.com  |   (313) 752-0235

  • GLLG Facebook
  • GLLG Twitter
  • GLLG Instagram
  • GLLG LinkedIn
  • GLLG YouTube

Oakland County Office | One Towne Square, Ste 1835, Southfield, MI 48076

admin@gllegalgroup.com  |   (248) 717-7777

© 2020 by Great Lakes Legal Group, PLLC