Unrelated Business Taxable Income
Summary
SIFMA AMG provided input to the U.S. Department of the Treasury and Internal Revenue Service’s request for comments to Notice 2018-672 regarding the calculation of unrelated business taxable income under section 512(a)(6) of the Internal Revenue Code for exempt organizations with more than one unrelated trade or business; interim and transition rules for aggregating certain income in the nature of investments; and the treatment of global intangible low-taxed income inclusions for purposes of the unrelated business income tax.
Excerpt
Internal Revenue Service
CC:PA:LPD:PR (Notice 2018-67), Room 5203
P.O. Box 7604
Ben Franklin Station
Washington, DC 20044
RE: Notice 2018-67: Unrelated Business Taxable Income
Ladies & Gentlemen:
The Asset Management Group (“AMG”)1 of the Securities Industry and Financial Markets Association (“SIFMA”) appreciates the opportunity to provide input to the U.S. Department of the Treasury (“Treasury”) and Internal Revenue Service’s (“IRS”) request for comments to Notice 2018-672 (“Notice”) regarding the calculation of unrelated business taxable income (“UBTI”) under section 512(a)(6) of the Internal Revenue Code3 for exempt organizations with more than one unrelated trade or business; interim and transition rules for aggregating certain income in the nature of investments; and the treatment of global intangible low-taxed income inclusions (“GILTI”) for purposes of the unrelated business income tax (“UBIT”).
I. Overview
Section 13702 of P.L. 115-97 (commonly known as the Tax Cuts and Jobs Act of 2017, or the “TCJA”) added new section 512(a)(6) to the Code. Section 512(a)(6) requires organizations exempt from tax who operate more than one unrelated trade or business to compute UBTI separately for each trade or business (without regard to the specific deduction under section 512(b)(12)). Under this provision, an organization’s UBTI for any tax year would be the sum of the amounts (not less than zero) computed for each separate trade or business, less the section 512(b)(12) specific deduction (which is currently $1,000).