Question
I need help with the following questions, A & B. I completed the problem but want to double check I am correct. A local exempt
I need help with the following questions, A & B. I completed the problem but want to double check I am correct.
A local exempt organization that trains at-risk youth for employment has an annual operating budget of $300,000, which includes revenue from operating a gift shop in a nearby hotel lobby. Gift shop sales result in a profit of $15,000. The organization has $6,500 of endowment income that it earns on permanently restricted net assets. The income from both the gift shop and the endowment is used to support the organization's exempt purpose. The balance of $278,500 required for annual operations is provided through public support and charges for services.
A) Calculate the UBIT if the corporate tax rate is 15% on the first $50,000 of net income and 25% on the next $25,000 of income.
B) Assume that the endowment income is reinvested rather than being used to support annual operations. Calculate the amount of unrelated business income.
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