NOTICE: The Finance Policies and Procedures Manual, along with the previous manual, is undergoing changes. These sites are continually updated to reflect changes in business processes. If you cannot find the information you are seeking in these policies, email for more information.
Policies and Procedures

Policy 712 – Unrelated Business Income

July 1, 1992
Last Updated
December 22, 2011
Responsible University Officer
Director of Financial Reporting and Management Services
Responsible Unit
Financial Reporting and Management Services

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. Notification can be completed by using the UBI Tax Questionnaire. The following are examples of potential unrelated business income-generating activities.

  • Any form of advertising that generates revenue for the University
  • Rental of real property, if services are provided to the renter or if the property is debt financed
  • Rental of personal property (e.g., equipment, computer time)
  • Rental or sale of mailing lists
  • Sale of any goods or services to non-University persons or entities
  • Finley Golf Course
  • Carolina Inn

Reason for Policy

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.


  • Any business activity conducted by a college or university primarily for the convenience of its faculty, other employees, and/or students is not taxable, regardless of the nature of the activity.
  • 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.
  • Other exclusions on a case by case basis may apply.

Special Situations



  • 712.1 – Reporting Unrelated Business Income Tax

Additional Information

Frequently Asked Questions

Q: What criteria are used to determine if an activity constitutes 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. 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 taxable organization.
  • "Not substantially related" means the activity that produces the income does not contribute importantly to the exempt purpose of the University.

Q: What are the tax implications of generating Unrelated Business Income for the University?
A: The presence of an activity deemed to generate UBI does not necessarily mean that a tax liability exists. The revenue may generally be offset by expenses incurred that are related to the activity.

Related Data



UBI Dir., Financial Reporting and Management 919-843-2694 919-962-4140
UBI Asst. Director, Financial Reporting and Management 919-962-1362 919-962-4140


December 22, 2011
June 9, 2008