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Nonprofits Get Easier IRS Rules for Classifying Taxable Income (1)

April 23, 2020, 5:22 PMUpdated: April 23, 2020, 8:30 PM

Nonprofits have some wiggle room to lump income streams together under long-awaited guidance telling them how to divvy up revenue that’s unrelated to their core mission.

The 2017 tax law required nonprofits to report unrelated business income—which is taxable—separately for each business area. For a university, for example, that could mean splitting up income from a soft-drink partnership and income from basketball ticket sales.

The change was seen as creating major complications for nonprofits, especially those with diverse income streams. But in guidance (REG-106864-18) released Thursday the IRS proposed a way for nonprofits to combine income streams. ...

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