It's called Unrelated Business Income and it comes about when some activity undertaken by a tax exempt organization is deemed to be unrelated to the reason why the organization was granted its exemption from Federal Income Tax.  If that activity is also profitable... A tax liability can arise.

For the parking income we had, the IRS alleged that the activity had no relation to our community service reason for tax exemption.  Since parking in the lot was not available to the grneral public and its location was separate from OPA they won the case and we paid the tax.

So anytime we do not allow public access to some activity and if that operation is profitable we might have a tax liability.

Someone suggested consulting a specialized tax attorney for guidance and that is a good idea.

Jeff

no