UBTI

Definition

Unrelated Business Taxable Income. Income earned by a tax-exempt entity that does not result from tax-exempt activities. The entity may owe taxes on this income.

Use UBTI in a sentence

The UBTI complicated our tax situation by increasing the amount of work we would have to do to organize the accounting side of our business.

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In a case where a business owes unrelated business taxable income (UBTI) this indicates they have earned profit outside of the parameters of their tax exempt guidelines, whether intentionally or erroneously.

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Investors are cautioned against placing certain assets such as MLP interests in their Individual Retirement Accounts as UBTI can result in taxes due upon exceeding certain thresholds.

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