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Business Procedures Manual

23.1 Definition

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Unrelated Business Income (UBI) is gross income from a trade or business regularly carried on by a college or university, which is not substantially related to the performance of its exempt purpose or function, except that the institution uses the profits derived from this activity.

Note: The mere fact that an activity generates a source of funds that is used to carry out a mission-related activity does not mean the activity per se is related to the mission. The IRS places particular emphasis on the size and extent of the activity. If an activity is conducted on a scale larger than reasonably necessary to carry out the exempt purpose, it is more likely to be treated as unrelated business income. Refer to IRS Publication 598, Chapter 3, for more details: http://www.irs.gov/pub/irs-pdf/p598.pdf.

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