UBIT to the Defense! ESOPs and Government Entities

5 Pages Posted: 12 Aug 2010  

Calvin H. Johnson

University of Texas at Austin - School of Law

Ellen P. Aprill

Loyola Law School Los Angeles

Date Written: July 18, 2010

Abstract

The unrelated business income tax is imposed on otherwise exempt organizations to prevent the shifting of business assets to exempt entities. Entities that are exempt (or believe they are exempt) from UBIT have recently acted as accommodation parties in transactions, allowing high-rate taxpayers to avoid tax on economic income that those taxpayers own in substance. This proposal would end the UBIT exemption for employee stock ownership plans, governmental pension funds, and other governmental affiliates.

Keywords: unrelated business income tax, UBIT, tax reform, shelf project, ESOP

JEL Classification: H20, K34

Suggested Citation

Johnson, Calvin H. and Aprill, Ellen P., UBIT to the Defense! ESOPs and Government Entities (July 18, 2010). Tax Notes, Vol. 128, p. 317, July 18, 2010. Available at SSRN: https://ssrn.com/abstract=1658080

Calvin Harsha Johnson (Contact Author)

University of Texas at Austin - School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States
512-232-1306 (Phone)
512-232-2399 (Fax)

Ellen P. Aprill

Loyola Law School Los Angeles ( email )

919 Albany Street
Los Angeles, CA 90015-1211
United States
213-736-1157 (Phone)
213-380-3769 (Fax)

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