712 – University of North Carolina at Chapel Hill Policy on Unrelated Business Income



The University is required to file an Exempt Organization Business Income Tax Return (Form 990-T) with the Internal Revenue Service reporting any unrelated business income generated by the activities of its academic and support units. The Internal Revenue Code states that a college or university is generally deemed to have unrelated business taxable income when it realizes gross income from any regularly conducted trade or business that is not substantially related to its educational and other exempt purposes. Unrelated business taxable income is also applicable to and reported for state tax purposes.


Policy Statement

All departments are asked to notify the University Controller's Office of any new programs that may generate revenues that fit the definition of unrelated business income. Report activities regardless whether they seem to be regularly carried on, as that determination needs to be made at a University level. Notification can be completed by using the UBI Tax Questionnaire. The following list, which is not exhaustive, provides examples of potential unrelated business income-generating activities.

  • Rental of real property, if services are provided for convenience of the occupant, if the property is debt financed, or if payment is based on net profits
  • Rental of personal property (e.g., equipment)
  • Rental or sale of mailing lists
  • Facility use licenses
  • Sale of goods or services to non-University persons or entities
  • Sale of advertising
  • Ordinary business income or loss from certain investments


  • An activity conducted by a college or university primarily for the convenience of its faculty, staff, and/or students is not taxable.
  • Research that meets the definition of scientific research is not taxable.
  • An activity that is used to train students as part of the educational curriculum is not taxable.
  • Certain investment income, such as interest, dividends, or capital gains, if not debt financed, are not taxable.
  • Other exclusions on a case by case basis may apply.

Additional Information

Special Situations


Frequently Asked Questions

Q: What criteria are used to determine if an activity will be subject to unrelated business income?
A: If the activity meets the criteria of a trade or business, is regularly carried on, and is not substantially related to the university's educational and other exempt purposes, then it will generally be subject to unrelated business income. Definitions are as follows:

  • A "trade or business" is an activity carried on to produce income from the sale of goods or the performance of services.
  • A specific business activity will be considered to be "regularly carried on" if it is conducted with a frequency and manner comparable to that of the same or similar activity by a commercial organization.
  • "Not substantially related" means the activity that produces the income does not contribute importantly to the exempt purposes of the University.

Q: What are the tax implications of generating unrelated business income for the University?
A: The activity's revenue and expenses should be tracked so that it can be determined if income or a loss exists. When income is generated for a particular year, then tax will be due at the current federal and state tax rates based on that net income.The activity generating UBI will generally fund the associated tax payments.

Related Requirements

External Regulations and Consequences


University Policies, Standards, and Procedures

  • Finance Procedure 712.1 - University of North Carolina at Chapel Hill Procedure on Reporting Unrelated Business Income Tax

Contact Information

Policy Contacts
Subject Contact Telephone Fax E-Mail
UBI Dir., Financial Reporting and Management 919-843-2694 919-962-4140 financialreporting@unc.edu
UBI Financial Accountant 919-962-2710 919-962-4140 financialreporting@unc.edu



  • February 5, 2018: Updated contact information.
  • December 22, 2011
  • June 9, 2008

July 1, 1992

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Article ID: 131550
Thu 4/8/21 9:11 PM
Wed 5/24/23 10:23 AM
Responsible Unit
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Finance and Budget
Issuing Officer
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Issuing Officer Title
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Director Financial Reporting
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07/01/1992 12:00 AM