Proposed regulations: Separately computed UBTI (text of regulations)
Proposed regulations: Separately computed UBTI
The U.S. Treasury Department and IRS today released for publication in the Federal Register proposed regulations (REG-106864-18) concerning exempt organizations subject to the unrelated business income tax under section 511.
The 2017 tax law (Pub. L. No. 115-97) that is often referred to as the “Tax Cuts and Jobs Act” (TCJA), included provisions that affect exempt organizations with more than one unrelated trade or business and specifically concerning the calculation of unrelated business taxable income (UBTI). In general, a tax-exempt organization is required to calculate separately the net UBTI of each unrelated trade or business. Any loss derived from one unrelated trade or business may not be used to offset income from another unrelated trade or business, and NOL deductions are allowed only with respect to the trade or business from which the loss arose.
The proposed regulations—published in the Federal Register as a 28-page document—
- Provide guidance on how an exempt organization subject to the unrelated business income tax under section 511 determines if it has more than one unrelated trade or business, and, if so, how the exempt organization calculates its unrelated business taxable income
- Clarify that the definition of “unrelated trade or business” applies to individual retirement accounts (IRAs)
- Provide that inclusions of subpart F income and global intangible low-taxed income (GILTI) are treated in the same manner as dividends for purposes of section 512
Read the proposed regulations [PDF 395 KB]
The purpose of this report is to provide text of these just-released proposed regulations. A more detailed discussion will be provided in a future report from KPMG.
For more information, contact a tax professional with KPMG’s Washington National Tax practice:
Ruth Madrigal | +1 202 533 8817 | firstname.lastname@example.org
Preston Quesenberry | +1 202 533 3985 | email@example.com
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.