Introduction

A$.$ Reason for the UBIT: Nonexempt organizations $($regular taxable business entities$)$ would be at a disadvantage when trying to compete with an exempt organization.

B$.$ Tax effect:

$1.$ Treats the unrelated business income as if it were subject to the Federal corporate income tax.

$2.$ Applies the Federal corporate income tax rate when computing UBIT.

C$.$ Applicable

$1.$ To all organizations that are exempt from Federal income tax under $501($c$),$ except Federal agencies.

$2.$ Includes religious, charitable, educational, literary, etc., organizations plus most other exempt organizations.

$3.$ Does not apply if unrelated business income is not greater than $BLANK.