For each of the following organizations, determine its UBTI and any related UBIT.
a. Worn, Inc., an exempt organization, provides food for the homeless. It operates a thrift store that sells used clothing to the general public. The thrift shop is staffed solely by four salaried employees. All of the clothes it sells are received as contributions. The $100,000 profit generated for the year by the thrift shop is used in Worn's mission of providing food to the homeless.
b. Small, Inc., an exempt organization, recorded gross unrelated business income of $900 and unrelated business expenses of $400.
c. In Care, Inc., is a §501(c)(3) exempt organization. It owns a convenience store and gas pumps, which it received as a bequest from a patron. The store/gas pumps entity is organized as StopBy, a C corporation. Because StopBy is profit able, In Care hires a manager and several employees to run the entity. For the current year, StopBy's profit is $640,000. All of this amount is distributed by StopBy to In Care to use in carrying out its exempt mission.

  • CreatedSeptember 09, 2015
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