Recent Developments

Issues that affect ministers and churches
Acknowledgment of Donors and the Unrelated Business Income Tax
Recognition of a corporation as a donor does not constitute unrelated business.

The IRS ruled recently that "acknowledging an underwriting of a public radio or television program" does not constitute unrelated business taxable income. Some tax-exempt religious radio and television stations mention the names of corporate and individual "underwriters" (e.g., significant donors). There has been some question in the past whether or not such arrangements create taxable "unrelated business income" to the stations. The IRS recently said no. It acknowledged that "[i]n certain instances … arrangements have been entered into with corporate sponsors that provide the sponsors with valuable marketing and other services in return for their support. Where the benefits that are provided are substantial, payments received by the exempt organization from the corporate sponsor may constitute unrelated business income subject to tax under section 511 of the Internal Revenue Code." However, the IRS went on to observe that: "Mere recognition of a corporate contributor as a benefactor normally is incidental to the contribution and not of sufficient value to the contributor to constitute unrelated trade or business. Examples of mere recognition that do not generally give rise to unrelated business income tax are … acknowledging an underwriting of a public radio or television program …." IRS News Release IR-92-4. [PCL14B3]

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Posted: March 2, 1992
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