Question
A university which is a calendar year Section 501(c)(3) tax-exempt organization, owns and operates an open year-round swimming pool. September through May, the pool is
A university which is a calendar year Section 501(c)(3) tax-exempt organization, owns and operates an open year-round swimming pool. September through May, the pool is regularly used by the university swim team for practice and competitive events and by university students taking swimming classes offered for academic credit. From June through August, when classes are not in session, the pool is open to the general public.
The university sells both summer memberships and daily admissions to the pool. During the summer, the pool provides a basic concession stand, with snacks, and hires additional part-time lifeguards and concession and ticket stand workers. Although many university students and employees use the pool in the summer, they do not receive discounted admission or memberships.
Use the financial income and expense information provided. Calculate the amount of the university's unrelated business taxable income (UBTI). If the amount is zero, enter a zero. Use whole numbers, and base-allocated amounts, if any, on the number of months.
IRS Form 990-T Unrelated Trade or Business Income |
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Gross receipts from unrelated business activities |
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Less: cost of goods sold |
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Gross profit | $54,000 |
Deductions directly connected to unrelated business activities: |
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Salaries and wages |
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Repairs and maintenance |
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Taxes and licenses |
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Depreciation |
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Employee benefits |
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Supplies |
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Total deductions directly connected to unrelated business activities |
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Unrelated business taxable income before specific deduction |
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Revenue:
Daily admission fees $35,000
Summer membership fees $16,000
Summer Concession sales $18,000
Interest income (bank account) $600
Total Revenue $69,600
Expenses:
Salaries & wages FT staff $85,000
FT EE benefits $4,700
Summer PT wages $18,000
Repairs & Maintenance $10,000
Taxes & Licenses $5,000
Pool Supplies $6,000
Concession snacks $15,000
Depreciation $12,500
Total Expenses $156,200
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