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The Unrelated Business Income Tax, Cost Allocation, and Productive Efficiency

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  • Sansing, Richard

Abstract

Organizations that otherwise are exempt from federal income taxes are taxed on their net income from business activities that are unrelated to their exempt purpose. This paper examines three settings in which an exempt organization receives income subject to tax. Whether the tax promotes or deters efficiency depends on the extent to which the accounting costs that are deducted for tax purposes correspond to the economic costs of the activity, excluding the cost of equity capital.

Suggested Citation

  • Sansing, Richard, 1998. "The Unrelated Business Income Tax, Cost Allocation, and Productive Efficiency," National Tax Journal, National Tax Association;National Tax Journal, vol. 51(2), pages 291-302, June.
    • Handle: RePEc:ntj:journl:v:51:y:1998:i:2:p:291-302
    DOI: 10.1086/NTJ41789327
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    Cited by:

    1. James R. Hines Jr., 1999. "Non-Profit Business Activity and the Unrelated Business Income Tax," NBER Chapters, in: Tax Policy and the Economy, Volume 13, pages 57-84, National Bureau of Economic Research, Inc.
    2. Ranjani Krishnan & Michelle H. Yetman, 2011. "Institutional Drivers of Reporting Decisions in Nonprofit Hospitals," Journal of Accounting Research, Wiley Blackwell, vol. 49(4), pages 1001-1039, September.
    3. James Alm & Daniel Teles, 2018. "State and federal tax policy toward nonprofit organizations," Chapters, in: Bruce A. Seaman & Dennis R. Young (ed.), Handbook of Research on Nonprofit Economics and Management, chapter 19, pages 370-385, Edward Elgar Publishing.
    4. Hofmann, Mary Ann & McSwain, Dwayne, 2013. "Financial disclosure management in the nonprofit sector: A framework for past and future research," Journal of Accounting Literature, Elsevier, vol. 32(1), pages 61-87.

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