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UNRELATED BUSINESS INCOME TAX (UBIT) SEPTEMBER 4, 2014.

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Presentation on theme: "UNRELATED BUSINESS INCOME TAX (UBIT) SEPTEMBER 4, 2014."— Presentation transcript:

1 UNRELATED BUSINESS INCOME TAX (UBIT) SEPTEMBER 4, 2014

2 UBI at - Agenda  UBI Certification  UBI Questionnaire  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  Original signature – mail to Payroll and Tax Services (preferred)  Requires completion of UBI Questionnaire

5 UBI Certification

6 UBI Questionnaire

7  Complete one for each activity  Complete one even if you have no UBI activity – your 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  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

15 UBI Financial Statement Template

16

17  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

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 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

21 UBI Financial Statement Template – Non-Personnel Expenses

22 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

23 UBI Financial Statement Template – GL Accounts, Resources and Contacts

24 Reconciliation to the General Ledger

25  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

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

27 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!)

28 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.  University Payroll & Tax Services is willing to help you determine if an activity might generate UBI.

29 Due Date Certifications, Financial Statements, and Supporting Schedules are due : Thursday, October 9, 2014 (for FY ) Questions, comments or requests for a departmental UBI visit, contact: University Payroll and Tax Services (352)

30 CPE Remember to sign-in today and complete an evaluation form to receive your CPE credit.


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