State Tax Treatment of UBTI for Exempt Organizations: Calculations, Conformance, and Apportionment

A significant challenge for exempt organizations is navigating federal and state rules on UBTI. The federal rules are often complex even with existing guidance; however, the variances in how states treat UBTI create additional difficulties for advisers to nonprofits. While most states conform to the federal government in both classifying an organization as tax exempt and in defining UBTI, there are numerous deviations from federal treatment.

With very few exceptions, most states impose a state-level tax on UBTI. Many of these states start with the federal definition of UBTI, but make state-specific modifications, generally in the form of required "add-backs." Additionally, many states do not allow exempt entities to carry-back net operating losses; some of these states permit loss carry-forwards for UBTI calculation purposes.

Perhaps the most complicated task for exempt organizations operating in multiple states is apportioning UBTI between the various states in which the nonprofit operates. Many states require exempt entities to use different apportionment formula approaches than they impose on for-profit companies. Advisers to exempt organizations must be able to reconcile various apportionment formulas and recognize where a state requires a specific apportionment requirement for UBTI.

Listen as our panel of experienced nonprofit tax advisers provides a practical guide to navigating multistate tax treatment of UBTI for exempt organizations.

• Federal treatment of UBTI
  • Identifying UBTI
  • UBTI calculations and schedules
  • Tax computation
  • Allocation of expense deductions
• State treatment of UBTI
  • States not conforming with federal exempt org classification
  • States that tax UBTI
  • Common states' adjustments to federal UBTI calculations
  • Range of rules for NOL carry-backs and carry-forwards
  • Apportionment challenges
  • Pass-through considerations
  • Section 512(a)(6) Siloing unrelated trade and businesses

The panel will discuss these and other important topics:

• What states deviate from federal treatment of UBTI?
• What states generally conform to federal UBTI calculations but with add-backs?
• State deviations in NOL carry-back and carry-forward treatment for UBTI
• Which states require a different formula for apportioning UBTI than the one applicable to for-profit commercial entities?

After completing this course, you will be able to:

• Identify those states that conform to federal UBTI calculations but have state-specific adjustments
• Discern various state trends on carry-back and carry-forward treatment of UBTI
• Recognize those states that require different apportionment formulas for UBTI calculations than they require of for-profit entities

• Field of Study: Accounting
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite:

  Three years+ business or public firm experience, preparing reviewed, compiled, and audited financial statements and the relative disclosures. Specific knowledge and understanding of GAAP, SSARS, and peer review policies.

  
  

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.