Most of us have been solicited by a nonprofit association to take advantage of their travel tour programs. You look through any association publication and you will find advertisements for various sponsored travel tours.
At the end of last year, many clubs received the exact same form letter from the IRS, Letter 6176 (4-2019) Catalog Number 72211B. The letter appears to have been generated by the IRS and sent to many 501(c)(7) exempt organizations reporting nonmember income regardless of the nonmember percentage of gross receipts.
The IRS recently issued proposed regulations regarding separately computing UBTI for each trade or business activity that could increase a not-for-profit’s tax exposure and liability.
How could a change in the tax law passed in 2017 have a substantial impact on clubs today? Given the recent business disruptions caused by the coronavirus, unrelated business income might not seem like a big deal.
The Senate and the House of Representatives have both passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The bill provides $2.2 trillion of Federal funds to keep the economy functioning. But what is in the law to aid Non-profits?
Nonprofits are now required to silo Net Operating Losses (NOLs) from one unrelated business activity so that it doesn’t create a reduction of taxable income from another profitable unrelated business activity.