Scenario

Arizona University, a calendar year Section 501(c)(3) tax-exempt organization, owns and operates an outdoor swimming pool that is open year-round. During the regular academic year, 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. The prices are consistent with those charged by other swimming pools in the area. During the summer, the pool also provides a very basic concession stand, with bottled water, soft drinks, and 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.

Instructions: Using the financial income and expense information provided below, 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 Record your answers on the template spreadsheet.

Arizona University Swimming Pool Current Year Income and Expense Revenue: Daily admission fees $ 35,000 Summer membership fees $ 16,000 Summer concession sales $ 18,000 Interest income-operating bank account $ $ 600 Total revenue $ 69,600 Expenses: Salaries and wages-full-time professional staff $ 85,000 Employee benefits-full-time employees $ 4,700 Summer part-time lifeguard and concession wages $ 18,000 Repairs and maintenance $ 10,000 Taxes and licenses $ $ 5,000 Pool supplies $ 6,000 Concession drinks and snacks $ 15,000 Depreciation $ 12,500 Total expenses $ 156,200 Submit the Lesson 12 Case Study 1 WN $54,000 4 5 6 7 8 9 IRS Form 990-T Unrelated Trade or Business Income Gross receipts from unrelated business activities Less: cost of goods sold Gross profit Deductions directly connected to unrelated business activities: Salaries and wages Repairs and maintenance Taxes and licenses Depreciation Employee benefits Supplies Total deductions directly connected to unrelated business activities Unrelated business taxable income before specific deduction 10 11 12