1. UNRELATED BUSINESS INCOME TAX (UBIT) SEPTEMBER 4, 2013

2. UBI at - Agenda  UBI Certification  UBI Questionnaire  UBI Financial Statement template  Reconciliation to General Ledger  UBI Tax Rates  Reminders

3. UBI Certification

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

5. UBI Certification

6. UBI Questionnaire

7.  Complete one for each UBI activity  Complete one even if you have no UBI activity – confirmation  Provide 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  Goals are to improve reconciliations to GL, consistency in reporting, and time required for 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

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. Reminders  UBI is a complex topic with multiple criteria and possible exclusions, often requiring interpretation.  “Substance over form” - You may try to call income a qualified sponsorship, but if it has the characteristics of advertising, it likely is.  University Payroll & Tax Services is willing to help you determine if your activity might generate UBI.

28. IRS Focus Areas  Continue to monitor:  Activities not “regularly carried on”  Lack of profit/profit motive – activities showing consistent losses for several years (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 that losses are being subsidized from somewhere!)

29. Due Date Certifications, Financial Statements, and Supporting Schedules are due : October 9, 2013 (for FY2012-2013) Questions, comments or requests for a departmental UBI visit, contact: University Payroll and Tax Services (352) 392-1231