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New Proposed UBTI Regulations: Identifying Separate Trades or Businesses, Siloing NOLs, Related CARES Act Changes

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Thursday, July 9, 2020

Recorded event now available

This course will provide nonprofit advisers and exempt organization personnel with a critical analysis of proposed unrelated business taxable income (UBTI) silo regulations issued Apr. 23, 2020. These regulations offer guidance in identifying separate lines of trade or businesses for purposes of calculating UBTI as required by the 2017 tax law. The panel will detail the specifics of siloing lines of business, describe the impact of new rules governing net operating loss carryforwards, and discuss how to apply the new guidance in calculating UBTI and its required tax.

Description

Notice 2018-67 provided preliminary guidance to tax-exempt organizations on calculating UBTI for separate lines of business as required under Section 512(a)(6) added by the recent tax law. The newly issued regulations provide new rules to separate trade or businesses and use two digits of the NAICS code to make the determination. As always, there are exceptions to the general rules, including an exception for investment activities.

Net operating losses present significant challenges for tax preparers since the new rules require that losses occurring after 2017 offset the specific trade or business activity while pre-2018 can offset aggregate UBTI. On top of this, the CARES Act added a five-year carryback of NOLs arising in 2018, 2019, or 2020. Further, taxpayers and advisers need clarification to incorporate this relief in conjunction with the newly issued regulations.

Listen as our experienced panel provides a review of the proposed silo regulations and offers practical guidance on calculating UBTI under Section 512(a)(6).

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Outline

  1. Background and Notice 2018-67
  2. Section 512(a)(6) provisions
  3. Identifying separate and unrelated lines of business using NAICS codes
  4. Exceptions
  5. Net operating losses
  6. The CARES Act

Benefits

The panel will discuss these and other high priority topics:

  • How to use NAICS codes to identify separate, unrelated trades or businesses
  • What the proposed regulations say regarding the treatment of partnership income and income derived from passive investments
  • How prior net operating losses are carried forward
  • The interplay of the CARES Act NOL carryback provisions with the newly proposed regulations
  • The new silo requirements to calculate UBTI separately for each unrelated trade or business

Faculty

Ansari, Farah
Farah N. Ansari, Esq.
Partner
Schenck Price Smith & King

Ms. Ansari is Co-Chair of the Nonprofit Practice Group and a member of the Tax Planning Practice Group. She possesses...  |  Read More

Reiss, Adam
Adam H. Reiss, CPA, CGMA
Partner
Schulman Lobel

Mr. Reiss brings over 25 years of experience serving as a trusted advisor to a diversity of not-for-profit...  |  Read More