Reforming Nonprofit Exemption Requirements
University of Illinois College of Law
May 26, 2011
Fordham Journal of Corporate and Financial Law, Vol. 17
This Article proposes a reform for nonprofit exemption and unrelated business income tax. Current tax law provides unclear guidance and requires exempt organizations to risk their entire exemptions on this guidance, leading them to make the socially inefficient choice to use for-profit subsidiaries to preserve their exemptions. Reforming the tax law will solve this inefficiency while providing exempt nonprofits with the desirable option to undertake efficient nonexempt activities to augment their operating budgets. This reform is particularly important in light of changes to the healthcare field; reform will enable exempt healthcare organizations to offset rising health costs and decreased reimbursements with other revenue opportunities.
Number of Pages in PDF File: 69
Keywords: nonprofit, UBIT, tax, corporate organization
JEL Classification: H21, H25, H40, H41, K34, l30, l31Accepted Paper Series
Date posted: May 31, 2011 ; Last revised: December 4, 2011
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