UCLA School of Law

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.