The Internal Revenue Service (the “IRS”) recently released
Notice 2018-67 (the “Notice”), providing initial guidance for tax-exempt organizations calculating unrelated business taxable income (“UBTI”) under changes made to the Internal Revenue Code (the “Code”) as part of the Tax Cuts and Jobs Act of 2017 (the “Act”).
In particular, the Notice relaxes the newly enacted “UBTI silo rule”, which requires tax-exempt organizations to compute UBTI separately for each unrelated trade or business. Pending release of proposed regulations that would treat certain investment activities of a tax-exempt organization as one trade or business for the purposes of the UBTI silo rule, the Notice creates two rules that allow a tax-exempt organization to aggregate UBTI with respect to “qualifying partnership interests”, as well as UBTI with respect to partnership interests acquired before August 21, 2018. The Notice also offers other guidance to tax-exempt organizations calculating UBTI under changes made to the Code under the Act.