UNRELATED BUSINESS INCOME TAX (UBIT)SEPTEMBER 4, 2014

UBI at - Agenda

UBI Certification UBI Questionnaire UBI Financial Statement template Reconciliation to General Ledger UBI Tax Rates IRS Focus and Reminders

UBI Certification

UBI Certification

Dean, Director, Department Chair signs

Complete one per Department/Center, to reflect all UBI activities

Original signature – mail to Payroll and Tax Services (preferred)

Requires completion of UBI Questionnaire

UBI Certification

UBI Questionnaire

UBI Questionnaire

Complete one for each activity

Complete one even if you have no UBI activity – your confirmation

Provide any comments/explanations as needed

UBI Questionnaire

UBI Guidelines

UBI Guidelines

UBI General Guidelines IRS Criteria (Publication 598 – Tax on

Unrelated Business Income of Exempt Organizations)

Unrelated Activity examples

Related Activity examples

Potential Exclusions

UBI Guidelines - Examples

UBI Guidelines - Exclusions

UBI Financial Statement Template

UBI Financial Statement Template

UBI Financial Statement Template Workbook includes multiple sheets

Improved reconciliations to GL Consistency in reporting by units Easier completion and review

Instructions sheet Financial Statement (populated primarily

by other sheets in the workbook) UBI% Worksheet – calculation of UBI %

used

UBI Financial Statement Template

UBI Financial Statement Template

UBI Financial Statement Template

UBI Financial Statement Template (cont.) Income – record amounts by GL account

and source (up to 7 sources) Cost of Goods Sold – record beginning

and ending inventories and FY purchases by GL account and source

Personnel Costs – record amounts by GL account and source for any accounts supporting the unrelated activity Costs for specific employees, if used, must

reconcile to a Payroll Cost Distribution report

UBI Financial Statement Template - Income

UBI Financial Statement Template - Personnel

UBI Financial Statement Template

UBI Financial Statement Template (cont.) Non-Personnel Expenses

Grouped by category Record by GL account and source Totals flow to the Financial Statement Summary

Depreciation Will be completed by Payroll and Tax Services Departments may be asked to verify

equipment/buildings used for UBI activities

UBI Financial Statement Template – Non-Personnel Expenses

UBI Financial Statement Template

UBI Financial Statement Template (cont.) GL Account Descriptions Resources/Links

Payroll and Tax Services website IRS Publication 598

UF Contact Information Additional worksheets provided for your

Supporting Schedules or Explanations

UBI Financial Statement Template – GL Accounts, Resources and Contacts

Reconciliation to the General Ledger

Reconciliation to the General Ledger

Documentary evidence of reconciliation from the PeopleSoft GL to the submitted UBI Financial Statement is required

Examples of source documents: Cash Summary Appropriations Summary Grant Projects Summary KK to GL Summary Cost Distribution Reports

UBI Tax Rates

Federal:

Florida: 5.5% Corporate Income Tax Rate

IRS Focus Areas

Continue to monitor: Activities not “regularly carried on” Lack of profit/profit motive – activities

showing consistent losses (UF is required to net these losses to zero until profit is made again.)

Dual-use Expense Allocations – need to recognize all funding sources and subsidies if you are calculating a UBI % to be applied to your expenses (IRS says the losses are being subsidized from somewhere!)

Reminders

UBI is complex with multiple criteria and exclusions, often requiring interpretation and a case-by-case analysis.

“Substance over form” - You may try to call income a qualified sponsorship, but if it has the characteristics of advertising, the IRS will likely conclude that it is.

University Payroll & Tax Services is willing to help you determine if an activity might generate UBI.

Due Date

Certifications, Financial Statements, and Supporting Schedules are due:

Thursday, October 9, 2014 (for FY2013-2014)

Questions, comments or requests for a departmental UBI visit, contact:

University Payroll and Tax Services(352) 392-1231

CPE

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