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.
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https://www.irs.gov/pub/irs-pdf/f990.pdf https://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.
https://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.
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Investing money the organization has until it needs to be spent is a pretty standard operating procedure.
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And it doesn’t appear that the interest is taxed.
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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!
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And remember, you can find answers to all kinds of questions non-profits and other tax issues, free. Where? Where else? At TaxMama.com
[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the subscribe link and join us.]- Ask TaxMama :: Where taxes are fun and answers are free
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- IRS Form 990 :: Return of Organization Exempt From Income Tax
- IRS Form 990EZ :: Short Form Return of Organization Exempt From Income Tax
- IRS Instructions :: to Form 990 and 990EZ
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