See IU Unrelated Business Income Tax Web-page

Indiana University (IU) is subject to Federal income tax on the income resulting from activities that are not related to its exempt purpose of teaching and research.

The Form 990-T, Exempt Organization Business Income Tax Return is filed annually with the Internal Revenue Service.

Departments wishing to engage in a new revenue producing activity [or continue unapproved existing activities] should complete the Revenue Producing Activities Questionnaire (RPAQ) .

The Tax department will analyze the activity for exposure to the tax on Unrelated Business Income (UBI). Departments subject to the tax should budget for a tax of 35% on the net unrelated income of the activity.

Remember, the IRS is concerned with how the funds are generated instead of how the funds are used!

See IRS Publication 598

- Tax on Unrelated Business Income of Exempt Organizations.