1. UNRELATED BUSINESS INCOME TAX (UBIT) AUGUST 18, 2016

2. UBI at UF - Agenda  UBI Certification  UBI Questionnaire  UBI Guidelines  UBI Financial Statement Template  Reconciliation to General Ledger  UBI Tax Rates  IRS Focus and Reminders

3. UBI Certification

4.  Dean, Director, Department Chair signs  Complete one per Department/Center, to reflect all UBI activities  Signature – mail to Payroll and Tax Services (preferred) or scan and send electronically  Requires completion of UBI Questionnaire

5. UBI Certification

6. UBI Questionnaire

7.  Complete one for each activity conducted in your department  Complete one even if you have no UBI activity (provides confirmation)  Provide any comments/explanations as needed

8. UBI Questionnaire

9. UBI Guidelines

10.  UBI General Guidelines  IRS Criteria ( Publication 598 – Tax on Unrelated Business Income of Exempt Organizations)  Unrelated Activity examples  Related Activity examples  Potential Exclusions

11. UBI Guidelines - Examples

12. UBI Guidelines - Exclusions

13. UBI Financial Statement Template

14.  UBI Financial Statement Template  Excel workbook includes multiple sheets Improved reconciliation to GL Consistency in reporting by units Easier completion and review process  Instructions sheet  Financial Statement (populated primarily by other sheets in the workbook)  UBI% Worksheet – calculation of UBI % used

15. UBI Financial Statement Template

17.  UBI Financial Statement Template (cont.)  Income – record amounts by GL account and Cost Center (up to 7)  Cost of Goods Sold – record beginning and ending inventories and FY purchases by GL account and Cost Center  Personnel Costs – record amounts by GL account and Cost Center for any accounts supporting the unrelated activity Costs for specific employees, if used, must reconcile to a Payroll Cost Distribution report

18. UBI Financial Statement Template - Income

19. UBI Financial Statement Template - Personnel

20. UBI Financial Statement Template  UBI Financial Statement Template (cont.)  Non-Personnel Expenses Grouped by category Record by GL account and Cost Center 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 their UBI activities

21. UBI Financial Statement Template – Non-Personnel Expenses

22. UBI Financial Statement Template – UBI % Worksheet

23. 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

24. UBI Financial Statement Template – GL Accounts, Resources and Contacts

25. Reconciliation to the General Ledger

26.  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

27. Reconciliation to the General Ledger  Navigate in myUFL to Enterprise Reporting > Department Reports  Select your College and then the Department  Choose June 2016 as the Period and Year  Select the Cash Summary (PDF or Excel)

28. Reconciliation to the General Ledger  The Cash Summary provides the YTD Expenses by GL Account to record in the UBI Financial Statement Template

29. UBI Tax Rates  Federal:  Florida: 5.5% Corporate Income Tax Rate

30. IRS Focus Areas  The IRS continues to watch for:  Activities not “regularly carried on”  Lack of a profit/profit motive – activities showing consistent losses (UF is required to net these losses to zero until profit is made.)  Dual-use Expense Allocations – Depts. need to recognize all funding sources and subsidies if you are calculating a UBI % to be applied to your expenses (IRS says these losses are being subsidized from somewhere!)

31. 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 here to assist you in determining if an activity might be subject to UBI tax.

32. Due Date Certifications, Financial Statements, and Supporting Schedules are due : Tuesday, September 20, 2016 (for FY2015-2016) Questions, comments or requests for a departmental UBI visit? Contact: University Payroll and Tax Services (352) 392-1231

33. CPE Remember to sign-in today. Also, sign the CPE sheet if you’d like to receive CPE credit.