Tax on Unrelated Business Income of Exempt Organizations

Even if a nonprofit organization is granted tax-exempt status by the Internal Revenue Service, it may still be subject to taxation on any unrelated business income. Unrelated business taxable income (UBTI) is defined as income from a trade or business regularly carried on by an exempt organization if the trade or business is not substantially related to the exempt purpose of the organization. In determining whether an activity is "regularly carried on," the Internal Revenue Service looks at the frequency and continuity with which it is pursued, and it is compared to the commercial activities of non-exempt organizations.

Credit Card Annual Fees

If you are a taxpayer who uses a credit card for business purposes, you might be tempted to deduct as interest the annual fee charged to your account under the terms of the credit card agreement. However, the Internal Revenue Service would disallow that deduction.

Abusive Tax Schemes Involving Indian Tribal Governments

Federally recognized tribes are sovereign legal entities, similar to state governments, with all the rights and attributes of a sovereign entity such as a state. They have a constitutionally guaranteed status as sovereign entities. An Indian tribe, as an income producing entity, is not subject to income taxation. However, income earned, if not otherwise exempt from income taxation, must included in the gross income of the Indian tribal member when distributed or constructively received by the tribal member.

Due Process in IRS Collection Actions

The Internal Revenue Service is now required to give taxpayers whose property might be levied upon pre-notification of the levy and an opportunity for a formal hearing and judicial review.

Rent as a Business Expense

Many businesses pay rent for the use of property. In general, a taxpayer can deduct rent paid as an expense only if the property rented is used in the business and the taxpayer does not have nor will he receive equity in or title to the property.