QUESTION:  Some board members have expressed concern about our church being subject to unrelated business income tax on some of our fundraisers.  I know that unrelated business income requires the church to be operating a trade or business, would we still need to worry about the unrelated business income issue?

ANSWER:  Yes, the phrase “trade or business” means any activity that is carried on for the production of income from the sale of goods or the performance of services.  That definition, of course, is quite broad and encompasses nearly everything that a tax exempt organization does.  In fact, the law regards a tax exempt organization as a bundle of activities. They may be related or unrelated, but they are still businesses.

Tags: churches, fundraisers, income tax, performance of services, trade or business, UBIT