Which of the following would you consider unrelated business income?

Text : Law of Nonprofit Organizations – The Life Cycle of a Charitable Organization) …….
Read Chapter 8 (349-404)and (IRS PUBLICATION 598 can also be referenced at irs.gov)….. please cite the text ………
PROBLEM QUESTION
You are an IRS auditor concentrating on the activities of a tax-exempt university.
Which of the following would you consider unrelated business income?
a. Tuition payments
b. Revenue from football ticket sales
c. Revenue from T-shirts with the team’s logo, sold in the school’s store
d. Revenue from royalties gained from the T-shirt company that used the school’s
logo on the T-shirts that it sells throughout the United States
e. Revenue from television broadcast rights for the football game
f. Revenue from parking fees charged to students and faculty
g. Revenue from a sponsorship agreement that requires a banner on the basketball
court that proclaims, “Joe’s Coffee—Have a Taste.”

ANSWER
As an IRS auditor focusing on the activities of a tax-exempt university, I would consider the following as unrelated business income:

**d. Revenue from royalties gained from the T-shirt company that used the school’s logo on the T-shirts that it sells throughout the United States.**

This income would be considered unrelated business income because it involves royalties from a licensing agreement with a T-shirt company. Such income typically arises from the use of the university’s logo, which is not directly related to the tax-exempt educational purpose of the university.

**f. Revenue from parking fees charged to students and faculty.**

Income from parking fees charged to students and faculty would generally not be considered unrelated business income as it is directly related to the services provided by the university to its students and staff. These fees are often part of the university’s auxiliary services and support its primary educational mission.

**g. Revenue from a sponsorship agreement that requires a banner on the basketball court that proclaims, “Joe’s Coffee—Have a Taste.”**

Income from a sponsorship agreement with a company like “Joe’s Coffee” would not typically be considered unrelated business income. Sponsorship agreements, when properly structured, can be seen as contributions rather than unrelated business income, especially if they do not involve substantial advertising or promotional activities.

The other options (a, b, c, e) involve revenue that is more closely related to the university’s educational mission and would not typically be considered unrelated business income.