It occurs to me that a large donation of blue chip stock that has appreciated quite handsomely over the last year may cause Unrelated Business Income tax problems for us when sold. Are my fears justified? Could we form a foundation for the purpose of supporting capital and endowment programs at our organization and transfer the stock to it before selling? Help!!

wyld@sbcglobal.net

> It occurs to me that a large donation of
> blue chip stock that has appreciated quite
> handsomely over the last year may cause
> Unrelated Business Income tax problems for
> us when sold. Are my fears justified? Could
> we form a foundation for the purpose of
> supporting capital and endowment programs at
> our organization and transfer the stock to
> it before selling? Help!!

While I am not a tax professional, unrelated business income or UBI for tax exempt organizations generally does not refer to passive income. Capitol gains are generally not considered UBI, see 26 USC 512. Contact a professional!


tcox@parknet.pmh.org

> While I am not a tax professional, unrelated
> business income or UBI for tax exempt
> organizations generally does not refer to
> passive income. Capitol gains are generally
> not considered UBI, see 26 USC 512. Contact
> a professional!

Classic UBI examples are:
1) a hospital doing commercial laundry for the motels in town.
2) getting too much revenue from selling items in the store unrelated to the mission of the museum (i.e. non-railroad toys at a railroad museum)
3) excessively hiring out a hall for gatherings not in support of the museum

Also check with the AAM and the Museum Store Association. As I recall, when UBI and UBIT were first a top topic about 10 years ago both of these organizations put out information.

Brian Norden