UNRELATED BUSINESS INCOME TAX (UBIT) AUGUST 25, 2015
Jan 16, 2016
UNRELATED BUSINESS INCOME TAX (UBIT)AUGUST 25, 2015
UBI at - Agenda
UBI Certification UBI Questionnaire UBI Financial Statement template Reconciliation to General Ledger UBI Tax Rates IRS Focus and Reminders
Changes to UBI Template Documents for 2014-2015
Please take note….
Added question #9 to UBI Questionnaire regarding student participation and whether the student receives course credit
Reviewed and modified expense descriptions to match changes made in myUFL
Added GL accounts to expense worksheet for Federal (799910) and State (799920) UBI taxes paid Federal tax cannot be included as an
expense, but State tax is allowable Modified UBI Financial Statement to
include 100% of State taxes paid as expense
UBI Certification
UBI Certification
Dean, Director, Department Chair signs
Complete one per Department/Center, to reflect all UBI activities
Signature – mail to Payroll and Tax Services (preferred) or send electronically
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 = 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 % Worksheet
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 taxable.
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:
Friday, September 25, 2015 (for FY2014-2015)
Questions, comments or requests for a departmental UBI visit, contact:
University Payroll and Tax Services(352) 392-1231
CPE
Remember to sign-in todayand complete an evaluation form
to receive CPE credit.