Laborers' International Union of North America - Page 6

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                         (A) Organizations described in sections                      
                    401(a) and 501(c).--The tax imposed by                            
                    paragraph (1) shall apply in the case of any                      
                    organization (other than a trust described in                     
                    subsection (b) or an organization described                       
                    in section 501(c)(1)) which is exempt, except                     
                    as provided in this part or part II (relating                     
                    to private foundations), from taxation under                      
                    this subtitle by reason of section 501(a).                        
          Section 512 defines UBTI as follows:                                        
               SEC. 512.  UNRELATED BUSINESS TAXABLE INCOME.                          
                    (a) Definition.--For purposes of this title--                     
                    (1) General rule.--Except as otherwise provided in                
               this subsection, the term “unrelated business taxable                  
               income” means the gross income derived by any                          
               organization from any unrelated trade or business (as                  
               defined in section 513) regularly carried on by it,                    
               less the deductions allowed by this chapter which are                  
               directly connected with the carrying on of such trade                  
               or business, * * *.                                                    
               Section 513 defines the term “unrelated trade or business”.            
          In relevant part, that section provides:                                    
               SEC. 513.  UNRELATED TRADE OR BUSINESS.                                
                    (a) General Rule.–-The term “unrelated trade or                   
               business” means, in the case of any organization                       
               subject to the tax imposed by section 511, any trade or                
               business the conduct of which is not substantially                     
               related (aside from the need of such organization for                  
               income or funds or the use it makes of the profits                     
               derived) to the exercise or performance by such                        
               organization of its charitable, educational, or other                  
               purpose or function constituting the basis for its                     
               exemption under section 501 * * *.                                     
               In summary, sections 511 through 513 require an otherwise              
          tax-exempt organization to pay tax on its UBTI.  Sec. 511(a)(1).            
          UBTI is an organization's gross income, less allowable                      

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Last modified: May 25, 2011