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Does a Non-Profit 501(c)(3) Realize Unrelated Business Taxable Income (UBTI) For Advertising?

Non-profit organizations which are exempt from income tax under 501(a) are subject to tax on unrelated business income. 501(b), 511. Unrelated business income is gross income derived by any organization from any unrelated trade or business, regularly carried on by it, less the deductions allowed. 512. An unrelated trade or business is a trade or business which is not substantially related (aside from the need of such organization for income or funds) to the purpose of the organization. 513. However, unrelated trade or business does not include a trade or business where substantially all the work is performed for the organization without compensation. 513(a)(1). See Rev. Rul. 75-201, 1975-1 CB 164.

The sale of advertising in a publication published by an exempt organization is an unrelated trade or business when the advertising activity is regularly carried on. Reg. 1.512(a)-1(f)(1). See also Rev. Rul. 73-424, 1973-2 CB 190.

Courts have held advertising revenue not to constitute unrelated business income in some circumstances. For example, in National Collegiate Athletic Assn. V. Comm., (1990, CA10) 66 AFTR 2d 90-5602, 914 F.2d 1417, 90-2USTC 50513, revg (1989) 92 TC 456, advertising revenue received by the NCAA from the sale of programs of its annually sponsored championship tournament was not unrelated business income where the tournament lasted less than three weeks and occurred only once a year.

IRS Chief Counsel strongly disagrees with the Tenth circuit. The IRS argues the state court should have taken into account the time spent soliciting the advertisements and preparing the advertising for publication. IRS announced it will continue to litigate the issue in appropriate cases. Action on Decision 1991-015, 7/3/91.

IRS distinguished NCAA where a state university received income from advertising placed in its football souvenir programs. Here, a significant time span was involved over which the activities were conducted. The football season lasted three months and the work in setting up the programs and soliciting adverting took even longer. IRS letter ruling 9137002.

Assuming that the journal is published periodically throughout the year, an exempt organization should not rely on National Collegiate Athletic Assn. The periodic publishing and on going solicitation efforts will likely constitute a unrelated business regularly carried on. See 512.

The court also held advertising revenue does not constitute unrelated business income in US v. American College of Physicians, (1986 S.Ct). In American College of Physicians, the court found that the advertising business contributes importantly to the universitys education program through the training of students.

Also, advertising revenue does not constitute unrelated business income if the advertising contributes to the organizations purpose. For example, publication of legal notices in a bar association journal contributes to the associations exempt purposes by promoting the common interest of the legal profession through providing a single source of information regarding legal events in the county and therefore, wouldnt result in unrelated business income. Rev. Rul. 82-139, 1982-2 CB 108. However, advertising revenue received by a bar association for ads place in its attorney directory are taxable income since the advertising is commercial in nature and represents an effort on the part of advertisers to maximize sales to a certain segment of the public. IRS Letter Ruling 9148054.

Similarly, magazine advertising revenues received by an exempt trucking association did not contribute to the associations exempt purposes where the advertising represented marketing efforts by the advertisers to sell their product. In this case, no systematic effort was made by the organization to advertise products related to the editorial content and no effort was made by the organization to limit advertisements to new products. Florida Trucking Assn Inc. (1986) 87 TC 1039.

It is clear that, with a few exceptions, advertising revenues received by a 501(c)(3) exempt organization will often generate unrelated business taxable income (UBTI).

posted by uzqqkdq @ 11:23 PM 0 comments

Brazilian Men's National Soccer Team Takes on a New Complexion

Brazilian dominance in soccer takes a new complexion. There used to be a time when the Brazilian men's national soccer team were of average size and build. They were small (shorter), fast and skillful. Diminutive in stature but this did not apply to their technical and tactical abilities.

The Brazilian men's national soccer team might appear to line up in some formal positional formation and set up. Once the game starts it is an all positions for everybody on the team. They seem to play a 1 (goalkeeper) -10 (field) as all the players are in constant motion and are able to play off of each other at any time. The team members do however have certain defensive responsibilities and are accountable for their respective areas.

They truely understand "the game" and are ready to be spontaneous as well as volatile.

The Brazilian team seems to make the opponents play catch up and defensively throughout most of the contest.

A goal scoring opportunity can come from any where and any one on the field and at any time.

The only thing that you can predict is that the goalkeeper will not leave the 18 yard box to act as a forward and score some goals.

Ronaldinho has just acquired his second FIFA international player of the year award in a row. Does he deserve it? Most definitely.
He is a pleasure to observe as he sets up most of his team mates to lead his current team FC Barcelona to the top of the Spanish "La Liga".

Now add the goalkeeper Dida who has been a major part of his team's successes, in the back and Adriano up front who has seemed to be totally unstoppable goal scoring machine on the forward line for the Italian "Serie A", Roberto Carlos on the left where he still has a command on the free kicks, and Ronaldo the task master who often and still shows flashes of brilliance in the mix and you have a fortress of power and abilities few can match.

I think the ball got rolling with the the introduction of Junior Biano as a defenseman in 1998. With the exception of France his presence was a dominant deterant for other teams.
The latest big man to join him is Lucio

Brazil found mass to be a compliment to all their other strengths. It would appear that they have continued to build from there. The average weight of their national team has increased without diminishing their agility and manouverability. Although not a necessity, muscle mass has been a factor in other team sports. This might be true in modern Futbol as speed has become an over-riding factor to the game in the last 15 years.Most of the elite players are also playing in the Italian and Spanish premier leagues and on similar if not the same teams. They are learning from each other by being rivals and combats as well as compatriots.

Here are the possible candidates for the next world cup roster for Brazil.

Goalkeepers:

DIDA,
JLIO CSAR

Defenders:

CAFU,
CICINHO,
EDMLSON,
GILBERTO Melo,
JUAN,
LCIO,
ROBERTO CARLOS da Silva,
Jos Vtor ROQUE JNIOR

Midfielders:

EMERSON Ferreira,
GILBERTO Silva,
JUNINHO Pernambucano,
KAKA',
RENATO,
Z ROBERTO,

Forwards:

ADRIANO,
Jlio BAPTISTA,
Ricardo OLIVEIRA,
ROBINHO,
RONALDO,
RONALDINHO Gacho,

Very impressive roster as was the one in 1998.

A team can only be as good as it is a team and is coached as a team.
A team can only be good if all the members play for the team and with the team.

It does NOT matter how many stars you have and how big the egos or the payroll is either.

Win as a team and lose as a team. Play as individuals and the team will lose. I say this not because outstanding players could change the outcome of games, but because other teams and players are more sophisticated and more knowledgable now than ever before. The opposition can read this and contain the key players rendering the rest of the team less potent.

posted by uzqqkdq @ 8:27 PM 0 comments