Non Profit Interest

TaxMama s Tax Quips Non Profit Interest – 6/19/08 – Thursday
Today TaxMama hears from Roger in North Carolina who needs to know “If a Non-Profit Organization (501C3) has a certificate of deposit, is the interest taxable?”

Hi Roger,

It’s clear that you do have to report the income. It’s considered investment income and goes on line 4 of the Form 990 or 990EZ.
http://www.irs.gov/pub/irs-pdf/f990.pdf http://www.irs.gov/pub/irs-pdf/f990ez.pdf

The real question, though, is the interest taxable?

I can’t find anything that says the investment income is taxable.
http://www.irs.gov/pub/irs-pdf/i990-ez.pdf

UBIT – unrelated business income tax is assessed against business-type of activities, not related to the main purpose of the organization. They’re just designed to help finance the organization. They don’t advance the purpose of the organization.

Investing money the organization has until it needs to be spent is a pretty standard operating procedure. And it doesn’t appear that the interest is taxed.

If I’m wrong, we’re going to get a flood of responses from readers. So stand by for a couple of days and let’s see!

And remember, you can find answers to all kinds of questions non-profits and other tax issues, free. Where? Where else? At TaxMama.com

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