Policy Overview
The UC Business and Finance Bulletins A-61, Policy on Unrelated Business Income and Expense, is the policy of the University to comply with the IRS regulations, which includes filing the Exempt Organization Business Income Tax Return (IRS Form 990-T) for Unrelated Business Income Taxes (UBIT).
An activity will be subject to unrelated business income tax if it meets the following criteria: (1) it is a trade or business, (2) it is “regularly carried on”, and (3) it is not directly related to achieving the University’s educational and research missions.
Pursuant to the Policy on Unrelated Business Income and Expenses, department head responsibilities include:
- Ensure that income and expenses are distributed properly between the department’s exempt functions and unrelated functions.
- Ensure that detailed records are maintained that segregate the department’s unrelated and related income if a unique revenue account is not assigned to the activity.
- Consult with the campus tax coordinator when planning an activity that has unrelated business income tax potential.
To help determine if an income producing activity is an unrelated business activity, department staff should complete the Nonfinancial Questionnaire (NFQ) (PDF) and the department head should review and approve the NFQ. The department staff should complete a questionnaire for any of the following types of activities:
- Each “new” activity initiated during the current year with a potential for generating unrelated business income;
- Any activity reviewed in a prior reporting year that has changed its mode or scope of operations during the current year.
For additional information, the Policy on Unrelated Business Income and Expenses can be found on the UCOP website along with the UBIT Nonfinancial Questionnaire (PDF) and UBIT Nonfinancial Questionnaire Instructions (PDF). Departments generating UBIT liability may be required to contribute to UBIT payments.
Once you have completed the UBIT Nonfinancial Questionnaire (PDF), please forward it to Financial Accounting and Controls (the designated campus tax coordinator) at gao@berkeley.edu for review.