Tax Tips for Higher Education
Qualified Parking as UBIT, Part 4
DCC has a parking lot with 400 spaces. The cost to build 8 years ago was $1,200,000. It is being depreciated over 15 years. They lease a surveillance system for $36,000 per year. DCC estimates the compensation of various security personnel assigned to the parking lot to be $80,000 annually. In addition, they pay $16,000 for sweeping/cleaning the lot. They have 100 employees who drive to work and park in the lot.
They tell us, “We are anticipating that ¼ of our parking lot costs will produce unrelated business income under Code Section 512(a)(7). That calculates to UBIT of $11,340. And, with a June 30 year end, we’ve missed two estimated payments in March and June of 2018.”
Fundraising Banquets
ISSUE: Be careful with your donor receipting with respect to charity benefit events such as banquets, dinners, galas, etc. SITUATION: Troas Bible College (TBC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii). They are required to file Form 990 annually.
They are hosting their first annual fundraising dinner. The cost to attendees is $80 per plate. Barbara’s Real Pit Steak House is providing the food (prime rib, baked potato, mixed vegetables, and key lime pie for each plate) free of charge as a donation to TBC.
Form 1098-T Update
ISSUE: The 2015 PATH Act mandated changes to Form 1098-T reporting. Those “Box 1 only” changes take effect in 2018. SITUATION: Idaho Bible College and Seminary (IBCS) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(i). They are not required to file Form 990 annually. The new Controller at IBCS just started last week. She called us to ask about issues with Form 1098-T including which institutions must file and what are the “changes” she’s been hearing about.
Qualified Parking as UBIT, Part 2
ISSUE: New Internal Revenue Code Section 512(a)(7) which creates UBIT for “qualified transportation fringes,” may affect far more institutions than first suspected. SITUATION: Marathon Bible College (MBC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii). They are required to file Form 990 annually.
Qualified Parking as UBIT, Part 1
ISSUE: New Internal Revenue Code Section 512(a)(7) may force your institution to file Form 990-T and pay unexpected taxes – ouch. SITUATION: Saltwater Christian College (SCC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii). They are required to file Form 990 annually. In meetings with SCC’s accounting team, we had a discussion about potential unrelated business income “imputed” on the “qualified parking” expenditures they make. SCC has three types of employee parking…