Publication 598 |
2001 Tax Year |
Partnership Income or Loss
An organization may have unrelated business income or loss as a
member of a partnership, rather than through direct business dealings
with the public. If so, it must treat its share of the partnership
income or loss as if it had conducted the business activity in its own
capacity as a corporation or trust. No distinction is made between
limited and general partners.
Thus, if an organization is a member of a partnership regularly
engaged in a trade or business that is an unrelated trade or business
with respect to the organization, the organization must include in its
unrelated business taxable income its share of the partnership's gross
income from the unrelated trade or business (whether or not
distributed), and the deductions attributable to it. The partnership
income and deductions to be included in the organization's unrelated
business taxable income are figured the same way as any income and
deductions from an unrelated trade or business conducted directly by
the organization.
Example.
An exempt educational organization is a partner in a partnership
that operates a factory. The partnership also holds stock in a
corporation. The exempt organization must include its share of the
gross income from operating the factory in its unrelated business
taxable income, but may exclude its share of any dividends the
partnership received from the corporation.
Different tax years.
If the exempt organization and the partnership of which it is a
member have different tax years, the partnership items that enter into
the computation of the organization's unrelated business taxable
income must be based on the income and deductions of the partnership
for the partnership's tax year that ends within or with the
organization's tax year.
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