Key Tax Reform Provisions Affecting Tax Exempt Organizations

On December 22, 2017, the tax reform law commonly referred to as H.R. 1 Tax Cuts and Jobs Act was signed by President Trump. Although many have focused on the effects of this bill on the for-profit and individual sector, the Act provides many changes that affect the tax exempt sector. Below are the key provisions that may affect tax exempt organizations.

1. Unrelated Business Income

There is a significant change to how unrelated business income (UBI) is calculated. Under current law, UBI is aggregated from all unrelated activities whether they are profitable or not profitable. Under the final law, organizations will report UBI separately for each unrelated trade or business, in effect requiring profitable business lines to be taxed separately without the benefit of offsetting losses from unprofitable lines of business.

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Author:

Amy Bibby, Partner | Tax
828.236.5797 | amy.bibby@dhg.com