Buyer beware – UBIT can take a bite out of alternative investments

Description

Abstract: The uncertain economy and tempestuous financial markets of recent years have led some nonprofit organizations to turn to alternative investments. While these investments may hold the potential of higher returns, they also come with the risk of unrelated business income tax (UBIT). Even in the absence of tax liability, alternative investments can involve significant filing requirements. This article describes the types of income that are and aren’t subject to UBIT, along with the additional tax forms that may need to be filed to avoid costly penalties.