Scenario: Heart 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 in the lesson, 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.

Heart University Swimming Pool Current Year Income and Expense

Revenue:
	Daily admission fees	$ 36,500
	Summer membership fees	$ 16,250
	Summer concession sales	$ 18,600
	Interest incomeoperating bank account	$ 300
	Total revenue		$ 71,650
Expenses:
	Salaries and wagesfull-time professional staff	$ 81,000
	Employee benefitsfull-time employees	$ 4,000
	Summer part-time lifeguard and concession wages	$ 20,000
	Repairs and maintenance	$ 10,200
	Taxes and licenses	$ 3,000
	Pool supplies	$ 7,250
	Concession drinks and snacks	$ 16,000
	Depreciation	$ 8,500
	Total expenses		$ 149,950

IRS Form 990-T Unrelated Trade or Business Income

1	Gross receipts from unrelated business activities
2	Less: cost of goods sold
3	Gross profit
4	Deductions directly connected to unrelated business activities:
5	Salaries and wages
6	Repairs and maintenance
7	Taxes and licenses
8	Depreciation
9	Employee benefits
10	Supplies
11	Total deductions directly connected to unrelated business activities
12	Unrelated business taxable income before specific deduction