Tax-Exempt Organizations

Question 1

What is a Section 501(c)(3) organization?

Answer 1

it is the most common type of exempt organization and must apply for tax-exempt status and be approved by the IRS to be listed as an exempt organization

Question 2

What is unrelated business income (UBI)?

Answer 2

income that is derived from an activity that constitutes a trade or business, is regularly carried on, and not substantially related to the organization’s tax-exempt purpose

although an organization may have tax-exempt status, it may be subject to regular corporate income tax on income from a business enterprise that is not related to its tax-exempt purpose