On April 23, 2020, the Department of Treasury and the Internal Revenue Service issued proposed regulations related to the ‘silo’ rules for Unrelated Business Taxable Income (“UBTI”). Under Internal Revenue Code (“Code”) Section 512(a)(6), as added to the Code through the Tax Cuts and Jobs Act in 2017, tax-exempt organizations must calculate their UBTI separately with respect to each trade or business. This, in effect, creates profit and loss silos so that losses from one trade or business cannot be carried over to offset profits from a different trade or business. The proposed regulations clarify the application of these siloing rules, including the identification (and separation) of trades or businesses and the treatment of partnership interests and other investments.
In the coming days, Hall Render will provide additional guidance regarding the proposed regulations and suggestions for tax-exempt organizations to guide their compliance efforts.
We anticipate that the proposed regulations will be published in the Federal Register on April 24, 2020. The pre-publication version of the proposed regulations may be accessed here.
If you have any questions on the issues discussed in or related to this article, please contact:
- Jeff Carmichael at (317) 977-1443 or jcarmichael@hallrender.com;
- Jim Willey at (317) 977-1409 or jwilley@hallrender.com;
- Calvin Chambers at (317) 977-1459 or cchambers@hallrender.com;
- Kelci Laster at (317) 977-1401 or klaster@hallrender.com; or
- Your regular Hall Render attorney.
