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Vocational Training Programs and the Unrelated Business Income Tax

IRS rules that this income is not subject to the UBIT.


IRS Letter Ruling 9718034

Key point. Income generated from the sale of goods produced by a charity's vocational training program are not necessarily subject to the unrelated business income tax.

The IRS ruled that income generated by a charity from various "vocational training" programs was not subject to the unrelated business income tax (UBIT).

A charity operates a residential program for troubled boys ages 12 through 18. Children are referred to the charity by government agencies and school districts. The charity provides both academic and limited vocational training, both of which it considers essential to its goals of developing improved social skills, more meaningful interpersonal relationships, and the development of self control, honesty, and self—esteem. Staff members provide individual, group, and vocational therapy for the residents.

The charity is located on ...

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  • November 3, 1997

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